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  CSPAN    Today in Washington    News/Business. News.  

    March 18, 2011
    2:00 - 6:00am EDT  

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this is directed to mr. barofsky. i am not certain. i am troubled by the long time assertionhat the success of tarp was determined by the return of taxpayer dollars. if that is the criteria in which we can judge the success or failure. i am troubled by that because i think it fails to take into account other consequences, even all the money is raid to the treasury, there were consequences of tarp not accounted for. i think of things in your testimony about large institutions continuing to enjoy it access to cheaper credit. there is a consequence to that. my small communi bank in kansas has a consequence to that occurrence. when you couple that with dodd- frank and increasing regulation.
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larger institutions have cheaper access to credit and a better ability to spread the cost of additional regulation among the larger economy to scale. my smaller banks are disadvantaged. congress responded by providing money to large institutions. there is a consequence in places like kansas for community banks. if the criteria -- we still to take accounts other consequences of this legislation. it fails to take into account, was there a better way to do it than we did? could there be a greater return? i have heard several talk about -- the savings and loan bail
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out. that was the criterion which we are judging success today. this is better, we will lose less money than we did them. i wonder about -- was that not a better example where we were able to reap return and prohibit investors from getting a return as well? one o the things that is a consequence of tarp is that those invested in these constitute -- institutions, they were held a lot less accountable for theirnvestments than continental? my question is a broad one. i am not satisfied when i hear that jusbecause the money has been repaid, this was a good idea. >> nor should he be. the tunnel vision of mission accomplished ignores the
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important non-financial costs of tarp. they are just as important and may prove to be more important. of the moral hazard, the legacy of too big to fail that tarp has left. its done real harm to governments -- it includes the failure of tarp to meet its very important main street goals as well as wall street deals -- wall street bulls. -- gaols. -- goals. this is not a simple black and white answer. it is a much deeper issue. >> when you originally talked about it, you talked about $356 billion. 80% of the news articles talk
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about tarp and talk about the $700 billion. i totally agree with what he said. there -- the thing that is amazing is that 60% of americans think we lost it all. 60% think we've lost all $700 billion. spending a little bit of time saying, okay, we have a problem here. and this is part of a big thing. all the questions are legitimate concerns. we did not lose $70 billion. 25 to $50 billion is a lot of money. the yacht -- that is an important point to make. >> thank you.
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is there any analysis by those of you have done oversights in regard to was there a better way to do it? was there a greater opportunity for return? >> we have 30 reports that you can take a look at. we have a final reports and you can look at how to do it. we do not write the rules. we start with the basic premise that congress has passed a law and we have oversight. if you go back and read the reports, a rich area to say, without the panic, without the concern, could we have done this a little diffently? there is a lot of meat in the study reports. >> only a former senator would attribute the responsibility back to congress. [laughter]
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>> thank you, mr. chairman. i want to welcome all of you here today. thank you for your testimony. senator kaufman, it is certainly a pleasure to see you again. you added some much to the work that has taken place. thank you for your oversights. i am thrilled to hear that you will be back at duke university doing your good work. it is great to see you again. one of the things that you talked about in your testimony is the reference to theigher funds for our smaller community banks. the smaller community banks in north carolina consistently are very concerned about their capital requirements, the regulaon, their inability to do so mucof the lending they have done in the past.
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it has so adversely affected so many of the smaller communities where these banks have been the mainstay. one of my concerns is what can we be doing in congress to reverse this trend? i am talking primarily about the higher costs of funds that you mentioned. to ensure that we maintain a by its network of community banks in our main street communities. >> mixture we do not have too big to fail. it is difficult -- make sure we do not have too g to fail. the key thing is that we have to get away from this too big to fail. it is bad isome many different ways. there is a lot of things and dodd-frank. look at our small banks right now. it is interesting to find out
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how many small banks are now in commercial real estate. why are small banks in commercial real estate? the big banks, and can do all the other services thathey use to do. they can do it at a much wer price because of the advantages that they have. are really do think -- they hang together. you have these major banks that feel like they can -- they are too big to fail. i think it is up to congress and up to the treasury and not to the other regulators to make sure that the dodd-frank provisions are in there. make sure that we do not have too big to fail.
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how will they survive when they have these giant comg to town with low interest rates? it is very difficult. unless you go into things like commercial real estate. and now you see what happens. it makes them -- it makes it tough for them to make money. >> thank you, senator. we agree very strongly that we have to have a thriving community bank industry in this country with the obama administration took office, we did not provide any additional funds to the largest banks in the country. we provided funds to about 400 very small banks. i agree with decisions they made. they were necessary to prevent a collapse of our system. but we have tried to work with the smaller banks. i also point out that while we have had some weakness in that
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sector, those banks are getting stronger and those banks that took the tarp money overall in a much better place than the industry average. the task now is to implement the tools under dodd-frank. you have to distinguish between what you have to do in a csis and what you do to look at what were the causes of the fire? how do we prevent this from happening again? >> it appears that some of the smaller banks are having trouble paying some of the tarp money back. are we setting them up by continuing to ask them to pay a higher rate? >> that is a very good question. they are not obligated to pay it. they have to have the approval of the regulators in order to pay it. as a result, many of the regulators have said, you should not pay this. you need to conserve your capital. that is fine with us.
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we do have a number of banks to have not been paying their dividend, but we look at the rate at which banks better in the program are paying dividends on preferred stock versus those outside the program, to the extent there is data, what we found was 11% of the banks in the program wereot able to pay the dividend. >> i wanted to return to -- i know several of you have talked about how this has not been operating the way you would of liked it too. mr. barofsky, could you speak about the changes going forward to helping homeowners? >> the important thing is there has to be initially and acknowledgement from treasury that this program is failing.
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the cessation of continuing to defend the status quo -- >> going forward, what can we be doing? >> i would say, you start with the reassessing the incentive structure and the penalty structure. if the current sysm is not working, revisit that structure. we have made other recommendations as well. recommendations regarding principal reduction, which appears to not be working. increasing transparency. there are a number of things. ao, there is a whole list of recommendations. >> senator kaufman, do you have any comments? >> the program is over.
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the reality othe situation is bad -- is across the table from each other and then modify a lung. that is pretty simple. now they have the servicers in there. there are two really big elephants and the room. -- in the room. the servicers are these third parties. they are the big banks. you have a conflict of interest, if you are a first servicer on a bank and you have a second lien on a mortgage, and the first mortgages was someone else,o you want to modify the first mortgage?
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when he modified that first mortgage, your second lien goes to zero. those aren't too gigantic conflicts. treasury -- those are too gigantic complex. the whole thing was designed for our subprime problems. it became quickly a prime problem. it is trying to cah up with all the different things. we've had four reports on it. we have identified with the anges are. it has to be a program that recognizes the realities of what happened. >> thank you, senator. i think we have implemented most of the specific suggestions that have been made by the oversight bodiesith respect to the program. as far as the basic structure, that is deteined by a lot and the powers that we had. it had to be voluntary program. i do not think it is a matter of
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acknowledging that is failing. i did not consider the fact we've got 600,000 people and to permit modification or the fact that we have helped another 1.4 million at least get some breathing room to a temporary modification, many of them went on to get other forms of modification outside of our program. or the fact that this program has resulted in significant changes in the industry is a failure. we have gotten about another 40,000 families. that is not enough and we need to do more. one of the things we have done in response to the congressional oversight panel's suggestion was that we did implement programs that addressed umployment and falling house prices, we set up a hardest-hit program. we're sending money to a number of states hardest-hit, including
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north carolina. those programs take time to ramp up. the important thing is to keep at it. this is a crisis that ticket long time to develop, so it is not going to be fixed overnht. >> mr. barofsky, can you elaborate about the program and which you advise us to do what it -- with the penalties? >> the numbers are potentially misleading. there may have been 40,000 initial permit modifications, but is that a next number? how many of those have dropped out? 1.4 million people -- it demeans the real harm that manyf those
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people who got failed trial modifications have suffered. it has been documented time and time again. >> can you come up with som examples of penalties? >> one place where we can start is by treasury living up to its commitment that it made in late 2009 about imposing financial penalties by withholding payments to mortgage services under the terms of their agreement. this is what they said. recently, treasury has been saying, we do not have that ability. we did not give ourselves the ability to post financial penalties for failure in conduct. we sent a letter and we asked them to detail to us what the anges in tir legal position. so far, they have ignored that. going back to the agreement and
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trying to withhold payment and impose -- thatould be the easiest thing to do with work within the contract if it is as they suggest ambiguous, try it. let's go to court. let's have servicers sued treasury under the idea that they are allowed to willfully and violates the terms of their agreement with the consequences. i think that is a good starting point. in congress, as far as financial penalties, is encouraging -- if he believes that he does not have the necessary too under these agreements, he should tell you what tools he needs in order to compel servicers to abide by the terms of their agreement. tell them at tools they need. >> am happy to respond.
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>> there is always more that can be done. this is an industry that was not working. >> we have not changed our legal position. we cannot impe fines and penalties in the manner of a letter later wed -- in the manner of a regulator would. we have over 200 people working on compliance. they would have preferred to write a check. we made services go back and solicit people. we made themo back and do door knocking. we made them go back and read about -- and reevaluate people.
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i think you will see us withhold more payment. we were working on getng the systems in a place for they could implement this program. i've been reading the testimony. i'm ppy to have anyone if you answered. i am thrilled to see my former colleague here. now i get to ask you all of this. just kidding. we did not do talk. i am happy to answer. we face the risk of the great depression.
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it is noted by many economists and other. it is all the government interventions. it was coordinated. it was powerful. it was swift. they all recognize that. elizabeth warren had plenty of criticisms of how to get there. she said it was obvious. she said we would have been back in the stone age. >> the panel never channel been answered. when you face the situation, they put it there. i think the kitchen sink, too. i think the figure out whether t.a.r.p. stop specific themes. this would have brubeck the
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grapes of wrath. panel agreed that t.a.r.p. and a bunch of other thingseally did stop the panic and keep us from a complete meltdown. the poinsettia number of negative things. the government is getting involved. and is not a sippers that -- perception of reality. panel fell that the federal government did that thing. >> i wonder if it is not moral hazards to allow a nation to go into depression. >> absolutely. i was on a show today.
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the as the about the lessons learned. they learned prevention. everybody can sit here and we can talk about this are that. ellis it right with them. it is a moral hazard of putting people back on its feet. the moral hazard of creating this institute to fail. there is no when in that one. he had to make sure you never have to face that. >> i oftenave average citizens stop in said "i do not get it, " when they make a mistake, they have to pay for their mistakes. explain systemic risk.
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it is a tough opposition. i am not thrilled t.a.r.p. as it was devised and executed. having listened to ben bernanke in 2008, and larly described a series of events that were unfolding, it would have a series ofinancial institutions collapse. surely you must have enough tools to get this through this time so we can ink more be proactively. we will have a global financial meltdown. basically, that women in the
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depression. market forces have been allowed to act on their own without any government intervention, we would be. his expertise is in depression- era economics. well work for roosevelt to get out of it. a politician. it had some weight to it. sometimes you need a sabrina understanding of where we started. the timeframe in which we had to face it in order to understand
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where we have been and where we come from. i hope you have learned that we can prevent it for the future and understand how we the to do it in a more efficient way. i want to take this opportunity to put this in the right frame. thank you. >> if you would wk us through what happened atig, what we did to get into that, where we are today. you know they did to it earlier. there are all kinds of reports that everything is over with. i do not think that is true. >> in the recent past, there is
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at least some chance of us exiting aig. >> how much money have we put in? >> i think it was high as 115 billion at one time. >> that they paid that back? >> they paid a fair amount. >> what is a fair amount? that i think we are down to about $96 billion. the patent let $50 billion or $60 billion. >> they owe about 2/3. >> more or less. >> that away substantial amount of money. >> if you include the assets -- >> tell us where we are today. >> the key is going to be the
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stock. >> that is a lot of money. >> that is a lot of money. there are questions about how deep the marketsill be. we are doing it to look at it. >> it is something like 90 something billion dollars. you have to have a pretty good stride. >> there is about 20 of that that is financing for the troubled assets that the fed has put in. there is about 50 billion worth of equity. >> >> windy think that might happen? >> i think there will be starting to sell in may. >> today is the following outstaing. under t.a.r.p. there is about
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$60 billion. the third is about $10 billion. it is done by assets. >> that is part that $60 billion. >> today the stock prices are but the value of our investment. there are abo $32 billion and the maiden lane vehicles bearing they have offered to take it as of one of the vehicles. as of today, at current market prices expect to cover the
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entire thing. >> we do not have a specific time tableeing excuse me. it is my understanding that on several occasions to release their internal projections for the number of mortgages that is said to be successfully modified under the modification programs. have bbc all of the internal projections that you requested? yes. we have. >> i assume that you provided that information. >> yes. how can we measure the success of the mortgage modification program now? >> as some of us have been
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saying, and think we have been seen benchmarks for some of the programs. i think that is what we would like to see. it does not mean they have done all the analysis we would like them to do. we live by them to try to come up with benchmarks for the programs. the public can be able to hold them accountable. >> you have to measure this. you are in the process of doing that. >> when when you do tha >> i do not know that we have plans to do that. we look for to doing it in the future. >> what is the future mean? that we have ongoing work.
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>> all of you have named recommendations to the in ministration during the course of the oversight. how many recommendations have been made to be administration regarding tarp -- t.a.r.p. >> it has not yet been implemented. what is ongoing today and what is the biggest failure so far is related tot. i would go back to the modification. stop accepting the status quo. fix the structure. imposed callbacks. why on earth had they not done so that -- have they not done
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that yet? they have not implemented this recommendation. >> >> i think we have implemented the recommendations with respect to the structure of the program. it is a compliance issue. all we can do is withhold the payments from when they actually enter in. the problem for the first year is that they were not getting a permanent modifications. we felt this was a bette results. i think he will see us impose more in the future. >> thank you perrin >> one more
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quick queson. before hemp, when servicers led to their on devices, what kind of modifications were offered to struggling homeowners? >> that is out of our jurisdiction. this is a systemic problem for servicers. they had these incredible conflicts of interest. big servicers do hold the lots of mortgages. they may be more interested in foreclosure than any kind of incentive.
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they hold a second lien. >> thank you. it is a very good question and important issue. prior to the launch of the program, there are few modifications that were occurring. this had been acute for two years. the few that were happening generally did not have the payments. one thing they accomplished was the standard as to how to go but modify mortgages. as well as a calculation of 4 makes sense to modify the mortgage. we do not pay for every modification. we do it where it makes sense of the alternative to foreclosure. these services have done a lot of pride -- proprietary modifications fate this volume
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has increased dramatically as a result. >> can i say one other thing? voted on this. i was talking to someone who is emerging acquisition person. he did not understand why there was a problem there. they know they would lower it. the reason why theenders cannot have it, they know if they go into bankruptcy, they cannot handle the real assets. it is just about how the world work it is about getting it.
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if it was a commercial loan, they would deal. this is what the value is. this is something to think about. the biggest difference between commercial and residential was reaching the modification. they know that they house prices will not be reduced. >> there are many lessons we can take. one key one is that oversight improve outcomes. s chairman, i intend to follow the example and push for tougher oversight andll that they do.
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they have the foreclosure crisis. we can better protect consumers, investors, and taxpayers. thank you again. we have been here today. the meeting is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]
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>> c-span, britain public affairs to you. >> the house of representatives debated a resolution that would have removed the u.s. troops from afghanistan. the vote was 93-121. this 20 minute portion of the debate. >> i rise in strong opposition. it would undermine the everett of nation's security. insanity has been described as doing the same thing over and over again and expecting different results. 3,000 people died on september
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11 because we walked away once from afghanistan thinking that it didn't matter who controlled that country, we were wrong then, let us not make the same mistake twice. . as are as the undersecretary of testifies stated earlier this week, the threat emanating from the border of afghanistan and pakistan is not hypothetical. there is no other place in the world that contains such a concentration of senior al qaeda leaders and operational commanders. continue to allow these hostile
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organizations in this region -- to flourish in this region is to put the security of our friends and allies and the united states at great risk, end quote. to quit the area before we rooted out the terrorists would not only hand al qaeda a propaganda victory of immeasure. able victory, but it would give them a sanctuary to mount fresh strikes at the west with virtual immunity. to withdraw from afghanistan at this point, before we finish the job, is to pave the way for the next 9/11. therefore the question we must consider is, can we afford to abandon our mission in afghanistan? general david petraeus, commander, international security assistance force, commander, u.s. forces afghanistan, stated, quote, i can understand the frustration.
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we have been at this for 10 years. we have spent an enormous amount of energy and money. we have sustained very tough losses and difficult, life-changing wounds. but i think it is important to remember why we are there, end quote. this is about our vital national security interests, mr. speaker. it is about doing what is necessary to ensure that al qaeda and other extremists cannot re-establish safe havens such as the ones they had in afghanistan when the 9/11 attacks were planned against our nation and our people. the enemy indeed is on the run. it is demoralized and divided. let us not give up now. let us not betray the sacrifices of our men and women serving in harm's way and they
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ask for nothing in return except our full support. dedicated servants such as my stepton and daughter-in-law lindsay, who served in iraq, and lindsay also served in afghanistan, dedicated servants such as matt and greg of our foreign affairs committee the majority staff who just returned from serving a year and we thank them for their service. they're right behind me. in kandahar and kabul. let us follow the lead of our wounded warriors who after long and arduous recoveries volunteer to return to the battlefield, volunteer to return to the battlefield to finish their mission. i urge our colleagues to oppose this dangerous resolution and mr. speaker, i reserve the balance of our time. the speaker pro tempore: the gentlewoman reserves her time. the gentleman from ohio.
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mr. kucinich: i yield myself two minutes. in the next two hours, we're going to demonstrate that the american people oppose this war by a margin two to one. i ask unanimous consent to enter into the record this "washington post" poll published on march 15 that says that 2/3 of americans think the war is not worth fighting. the speaker pro tempore: without objection, so ordered. mr. kucinich: in the next two hours we're going to demonstrate we're spending $100 billion a year on this war. there are those saying the war could last another 10 years. are we willing to spend another $1 trillion on a war that doesn't have any exit plan, for which there is no time frame to get out, no end game where we haven't defined our mission? the question is, not whether we can afford to leave. the question is, can we afford to stay. i submit we cannot afford to
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stay. in the next two hours, we are going to nonstrait that the counterintelligence strategy of general petraeus is an abysmal failure and needs to be called as much. -- as such. i want to conclude this part of my presentation with a unanimous consent to put into the record an article by thomas friedman in the "new york times" that says, what are we doing this year supporting corrupt and unpopular regems in afghanistan and pakistan that are almost identical to the governments we're applauding the arab people were overthrowing. i reseven the balance of my time. the speaker pro tempore: the gentleman reserves his time. the gentleman from california. >> thank you, mr. speaker. i'm pleased to yield two minutes to the ranking member of the armed services committee, mr. smith of washington. mr. smith: thank you, mr. speaker. i rise in opposition to this resolution. i do so as one who does firmly
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believe we need to, as soon as we responsibly can, end our military engagement in afghanistan. the cost is very real. i represent joint base lewis mccord which includes fort lewis army base and we have lost many soldiers in after depan stan. the families understand the cost. we need to wind down this war as quickly and responsibly as we can. unfortunately, this resolution does not give us the opportunity to do that. and we have clear national security interests in afghanistan. while i may agree with many of the statements about the troubles and challenges we face in that region, the one thing you'll hear today that i cannot agree with is the idea that we have no national security interests in afghanistan and pakistan or that we somehow do not have a clear mission. we have a clear mission. we do not want the taliban and their al qaeda allies back in charge of afghanistan or any significant part of afghanistan from which they could plot attacks against us as they are
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still trying to do in the parts of pakistan they're in. we need to get an afghanistan government that can stand up and they're going to need our help to get there. there are many who argued, and i'm sure some on both sides of the aisle, would be sympathetic with the notion that we need to reduce our commitment there, that a full-scale counterinsurgency effort or 150,000 nato and u.s. troops combined is too much. let's go with a lighter footprint, many have advocated that. our focus is on counterterrorism, focus on going after the terrorists and allow the afghans to take the lead on everything else. there's a plausible argument for that. this resolution does not allow that. i want the members of this chamber to understand, this resolution requires complete withdrawal of all u.s. forces by the end of this year and i can tell you, as the ranking member on the armed services committee, that is not in the national security intest of this country. we may have a legitimate debate about what our presence should be, how we should change it --
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can i have an additional 30 seconds? >> i yield the gentleman an additional minute. mr. smith: but the notion we can walk away from this problem, as ms. ros-lehtinen pointed out, is not true. it's a problem i as much as anyone would love to be able to walk away from. what mr. friedman has to say about the goths of afghanistan and pakistan is spot on. but the problem is we can't walk away and let them fall because of the national security implications that that has for us right here at home given what the taliban and al qaeda would plan. i'm all in favor of more reasonable plans for how we go forward in afghanistan but simply heading to the hills and leaving is not a responsible plan, it's not even really a plan for how to deal with the difficult challenges we face in that reand i urge this body to oppose this resolution. i yield back the balance of my time. the speaker pro tempore: the
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gentleman yields back. the gentleman from north carolina. mr. jones: thank you, mr. speaker. i want to thank the gentleman from ohio, mr. kucinich, for giving me half his time. we are debating how long are we going to be in afghanistan. recently, secretary gates testified before the armed services committee, which i serve on, and said that he thought by 2014 we could start substantial retux in our troop strength in afghanistan 20 14, it might be 2015, 2016. that's why this debate in this resolution is so important. not important for those of us in the house, but important for our military and the american people. and mr. kucinich did make reference to "the washington post"/abc news poll taken a couple of days ago that said that 73% of the american people said it's time, this year to bring our troops home. in addition, i would like to share a quote from the leader
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of afghanistan, mr. karzai, he is our man in afghanistan. all right, he's our man, this was his quote three days ago. i request that nato and america should stop these operations on our soil. this war is not on our soil. if this war is against terror, then this war is not here. terror is not here. the number of al qaeda and their presence in afghanistan is about 20 or 30, most of them are in pakistan, i would agree with that. but this debate is critical. i want to, before i reserve the balance of my time, i want to share very quickly a letter from a retired colonel, a marine who lives in my district, i am writing this letter to express my concern over the current afghanistan war. i am a retired marine officer with 31-plus years of active duty.
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i retired in 2004 due to service limitations or i'm sure i would have been on my third or fourth deployment by now to a war that's gone on too long. i'll go to the bottom of this. it makes no sense if we're there four years or 40, the results will be the same. he closes the let they are way, this war is costing the united states billions of dollars, a month to wage -- a billion -- the united states billions of dollars a month to wage and we're getting americans killed, the afghan war has no end state for us. i urge you to make contact with the newly elected men and women in congress and ask them to end this war and bring our young men and women home. if any of my comments will assist in this effort, you're welcome to use this and my name, respectfully, dennis g. adams, lieutenant colonel, retired, united states marine corps. i reserve the balance of my time.
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the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from ohio. mr. kucinich: i'd like to yield two minutes to the gentlelady from california, ms. woolsey. ms. woolsey: mr. speaker, i rise in absolute support of the resolution offered by the gentleman from ohio. the war in afghanistan almost 10 years old, has been an utter failure in every possible way. it hasn't eliminated the terrorist threat. it hasn't destroyed the taliban. it hasn't advanced national security objectives. it hasn't promoted a vibrant democracy in afghanistan. it hasn't done any of the things it was supposed to do. and general petraeus' testimony this week didn't inspire much confidence either. he continues to offer the same vague reassurances about
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progress we've supposedly made while being sure to say that challenges remain, he can continue justifying a substantial troop presence in afghanistan. but i'm not reassured in the least. much more importantly, the american people aren't reassured. after nine and a half years, after seeing 1,500 of their fellow citizens killed, after writing the check -- a check to the tune of $386 billion, they've had enough. they are angry, they are frustrated. as well they should be. a new poll shows that nearly 2/3 of americans, 64%, think the war isn't worth fighting. this is one of the least popular things our government is doing and yet it's just about the only one republicans don't want to cut. i think it's about time the people's house listened to the people. on the issue of war and peace and life and death.
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we need to negotiate and we need to sign the status of forces agreement, sofa, with afghanistan. we need to move kickly toward the massive redeployment in july as the president promised more than a year ago. in the name of moral decency, fiscal sanity and constitutional integrity, it's time to bring our troops home. i yield back. the speaker pro tempore: the gentlewoman yields back. the gentlewoman from florida. ms. ros-lehtinen: thank you, mr. speaker, before i'm pleased to yield three minutes to the gentleman from california, mr. mckeon, the chairman of the house armed services committee, it is important to underscore as undersecretary of defense -- as the undersecretary of defense has, that to withdraw from afghanistan at this time before we finish the job is to pave the way for the next 9/11. she and other officials note we need look no further than the example of a 36-year-old german
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of afghan origin who u.s. interrogators talked to and he revealed that osama bin laden was planning an attack on europe. without our boots on the ground in afghanistan, the plot against europe might never have been uncovered. without our boots on the ground we won't be able to stop the next wave of attacks against our homeland, our citizens, our families, and ourselves. i'm pleased to yield three minutes to the gentleman from california, mr. mckeon, the esteemed chairman of the house armed services committee. . the speaker pro tempore: the gentleman is recognized for three minutes. mr. mckeon: i join with my colleagues from the foreign affairs colleague and colleagues from the armed services committee in opposition to this resolution. this resolution would undermine the efforts of our military commanders and troops as they work side by side with their afghan and coalition partners. yesterday in his testimony before the house armed services committee, general petraeus, commander of the u.s. and allied
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forces in afghanistan, described significant progress made by our troops and afghan forces. but while the united states is on track to accomplish our objectives by 2014, the general also warned that this hard-fought progress is fragile and reversible. and he urged the continued support from this congress for our mission in afghanistan is vital to success. one -- when asked specifically how our troops and enemies would view the resolution before us today, general petraeus stated, the taliban and al qaeda obviously would trumpet this as a victory. needless to say it would completely undermine everything our troopers have fought so much and sacrificed so much for. mr. speaker, when the president authorized the surge of 30,000 additional troops, he reminded us of why we are in afghanistan. it's the epicenter of where al qaeda planned and launched the 9/11 attacks against innocent
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americans. it remains vital to the national security of this country to prohibit the taliban from once again providing sanctuary to al qaeda leaders. moreover, withdrawing before completing our mission would reinforce extremist propaganda that americans are weak and unreliable allies and to facilitate extremist recruiting and future attacks. like most republicans, i supported the president's decision to surge in afghanistan . i believe that with additional forces, combined with giving general petraeus the time, space, and resources he needs we can win this conflict. during the visit last week with our troops in afghanistan, secretary gates observed, the closer you get to this fight, the better it looks. having just returned myself from afghanistan a few weeks ago, i couldn't agree more. our delegation to afghanistan met with senior military commanders and diplomats, talked
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to airmen at bag ram, marines in helmund and soldiers in kandahar. it was obvious our forces have made significant gains and reversed the taliban's momentum. our forces and their afghan partners have cleared enemy strongholds, swept up significant weapons caches, and given more afghans the confidence to defy the taliban. we made considerable progress in growing and professionalizing the afghan's -- afghanistan's army and forces. as significant as our troops' achievements in the fields are, they can easily be undone by poor decisions made here in washington. today's debate is not being conducted in a vacuum. our troops are listening. our allies are listening. the speaker pro tempore: the gentleman given an additional 30 seconds. mr. mckeon: the taliban and al qaeda also are listening and finally the afghan people are
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listening. mr. speaker, i want to send a clear message to the afghan people and government that our coalition partners, our military men and women, that this congress will stand firm in our commitment to free us from the problems that the taliban created for us on 9/11. we will not have this sanctuary ever happen again. and i urge my colleagues to vote
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half hour hearing. [inaudible conversations] >> with the committee will come to order. the chair announces the presence of a quorum. today the committee on the
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natural resources is here to hear the testimony of harnessing american resources to create jobs and address rising gasoline prices. domestic resources and economic impacts. under the rule 4f opening statements are limited to the chairman, ranking member of the committees so they can hear from -- so we can hear fro the witness is clearly so i ask unanimous consent any member that desires to have an opening statement in the record shall be granted. without objection, so ordered. the chair will recognize himself for an opening statement. every american is feeling the pain from the rising gasoline prices. there's no escapes at. it costs more to drive to work and run errands. it costs more to take the kids to school. even those who don't own a car are paying more for groceries and other goods because the transportation cost to get products to market. the natul resources committee has jurisdiction over all federal land both onshore and offshore. what this is where the majority
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of americans energy reserves are located and also where the obama administratiohas done the most to block energy production. the purpose of today's hearing is to examine how to harness these energy resources on federal land to help create jobs and address the issue of the rising gasoline prices. a recent report from a congressional research service detailed just how large our energy reserves are in the united states. our combined recoverable oil, natural gas and coal resources total 1.3 trillion barrels of oil equivalet. the largest in the world. more than saudia arabia, china and iran. anthis figure doesn't even account for t vast oil shale reserves in the west, which the u.s. geological survey estimates to be greater than 1.5 trillion barrels of oil. the best way for the united states to insulate themselves long term from unpredictable
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world events and rising gasoline prices is to produce more energy here at home. we have the resources to produce our own energy and we have the best and the latest technology to accomplish it safely. but for some baffling reason, this administration is choosing not to do so. since the president earliest days in office, his administration has blocked, delayed, hindered and obstructed energy production across america from coast to coast, onshore and offshore all the way to alaska. this adinistration has canceled leases in utah, the late oil shale production and colorado, in pos de facto moratorium on the gulf of mexico, block offshore energy in both of the atlantic and the pacific coast, retroactively to truth the coal mine in west virginia, blocked energy production on the tribal land for what the country and in people offshore and onshore production in alaska and the
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list goes on and on. all of these actions cost american jobs to lead to higher gasoline and energy costs. incredibly the president and the white house have been telling a very different story. but the rhetoric doesn't match the reality. the white house has even been touting statistics on increased u.s. oil production. they are trying to claim credit for actions that took place long before president obamtook office. an increase in oil production today is the result of the pro energy policies of the previous administrations, not this one. less production, higher gasoline prices, jobs being shipped overseas and deeper dependence on foreign countries these are the real results of this administration's policies. i'm full believer in expanding american energy from solar and wind to hydro and biomass. however, oil and natural gas and coal are in trouble parts of our
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daily lives and argues for far more than just fuel and transportation. they enable millions of americans to heat their homes in the winter. th are an essential ingredients in prison plastics, tires, farm fuel lasers, couters and other high-tech devices. evin blackberrys and iphone is that members of the staff can never seem to put down are in this category. i announced yesterday my intention to introduce bills the will help produce more energy by putting people in the gulf back to work and reverse this president's offshore trawling than. these will be the first of several bills the will be introduced. we are working on an array of specific proposals introduced as part of american energy institute. so, really it all comes down to one very simple choice. do we want to produce our energy here in america and create american jobs, or do we want to jeopardize our national security by deepening our reliance on foreign countries for energy? to me, the answer is not a
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difficult one. so, with that, since i see the minority some of their members are not here, in fact i now know why. one of the ranking members on the floor of the house i see so modern innovation has allowed me to see that. you don't see it but i do. [laughter] and so when he comes back we will give him the opportunity to make his statement. i advised we are going to have the votes here in the shortest ten minutes that happens in this process. but i want to call the first panel and icrc to. we have the honorable richard, administrator of the u.s. energy information administration. bring the price come energy resource coordinator for the u.s. geological survey. mr. genomic me, manager of the energy research congrsional research service. dr. michele, chief energy economist at the university of
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texas. mr. caruso, senior adviser energy and national security center for strategic and international udies and mr. frank rusco -- i had two choices and i missed the first one. director of energy and science issues for the gao. so we will proceed with our panel right now. and i'd like to recognize richard toole, and i might mention that under the rules we have here we have a timing mechanism. you're full statement will appear in the record, but i would like to ask you if you keep your oral testimony to five minutes. when the green light is on it means you have to be could have up to four minutes and when the yellow light is on this 30 seconds and when the yellow light goes on i woul ask you to close your remarks if you could. so you are recognized for five minutes. >> thank you mr. chairman.
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i appreciate the opportunity to appear before you and the committee today. the energy administration is the statistical analytical agency in the u.s. department of agency. the eia doesn't take positions on policy issues and has independence with respect to the information and analysis we provide. therefore our views shouldn't be construed as representing those of the department of energy or other federal agencies. starting on the near-term outlook for the oil and gasoline markets the eia expects the prices over the next two years particularly in light of recent events in north africa and the middle east, the world's largest oil-producing region. our latest forecast issued earlr this month projects regular gasoline at the retail pump will average $3.70 per gallon this summer and $3.56 per gallon for the entire year, which is about 77 cents per gallon higher than last year's level. there is significant regional variation in the gasoline prices and there's also sycophant on uncertainty surrounding the
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forecast as discussed in my recent testimony. the market might be affected by the issues considered in this hearing is important to recognize the important differences markets for oil and natural gas. the price of oil and gasoline produced from it generally reflect conditions on the world oil market including the global balance between supply and demand and concerns related to actual and potential disruptions. in contrast, the price of natural gas is largely determined by the balance of the supply and demand in north america pure yet for this reason i would like to address natural gas and oil separately starting with natural gas. in 2010 the overall u.s. natural gas production increased while prices were generally stable. we expect the trend to continue although natural gas prices can volatile often due to weather-related events. the current u.s. natural gas market reflects the tremendous growth in the shale gas production which more than doubled between 2008 and 2010
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and 2010 represeted 22% of the total natural gas production in the united states. u.s. proved reserves of natura gas grew by over 63% in the last decade and have now reached the highest level since 11. the eia sees considerable potential for thecontinued growth in the shale gas production with shale gas to supply nearly half of the u.s. natural gas production by 2035. the eia's annual energy outlook preference case which assumes the continuance of current laws and regulations and the increase in the natural gas production over the next 25 years with u.s. net imports of natural gas expected to fall from 11% of the consumption in 2010 to only about 1% of consumption by 2035. because the domestic shale gas resources are located primarily under the private and state lands we would not expect access issues on federal land to have a
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major affect in the projections for u.. natural gas production reserves or prices. let me now turn to issues surrounding oil production in the markets. when considering the effect of changes in the future production it is important to recognize the resource access doesn't typically translated immediate or near-term production. in addition, the impact on market prices depends only on the magnitude and timing of actual production flow, but also the magnitude relative to global liquid supply which is currently about 88 million barrels per day. in the short term, oil markets react, constantly react to competing factors in the global cotext and it is extremely difficult to disentangle the near-term impact of the made to long-term involvement in the context of oil markets that see typical daily price movements in the range of one to 2% and much higher fluctuation at that time. long term we would not expect additional volumes of oil what could flow from resources on federal land due to greater
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access to have a large impact on or oil and gasoline prices. this is due to the globall integrated nature of the world oil market and the more significant long-term responsive text of oil demand and supply to the price movements compared to the short term responsiveness. given the increasing importance of opec supply in the global oil supply and demand balance, another issue is how opec pruction would respond to any increase in the supply potentially offsetting any direct price effects of increased u.s. production. of course, greater domestic crude oil production the matter what the cause be increased development, higher resource potential in the fields or wider application of advanced technology what impact local economic activity and net oil imports. my written testimony provides additional information on the eia's estimates and projections. mr. chairman and members this concludes my testimony and i would be happy to answer any questions. >> that is absolutely perfect
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timing, mr. newell. [laughter] if that is a template for how we are gog to do that thi is going to be a wonderful durin [laughter] thank you -- thank you very much. now the pressure is on ms. pearce. you are now recognized for five minutes. >> thank you, mr. chairman and members of the committee for the opportunity to appear today to discuss with you the u.s. geological survey role in studying, understanding and assessing domestic energy resources. the u.s.conduct science investigations and assessments of geologically based energy resources including conventional and unconventional resources. the mission of the u.s. -- usgs program is to understand the process is critical for the coordination, accumulation, occurrence and alteration of the geologically based energy resources to conduct scientifically robust assessment of the resources and to study the impact of the energy resource occurrence and or production on the use of the environmental and human health. the result from the scientific studies are used to evaluate the quality and distribution of
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energy resources accumulation and to assesthe energy resource potential of the nation exclusive of the federal offshore waters and the petroleum resource potential of the world. one important goal of the usgs domestic energyctivities to conduct research assessments of undiscovered technically recoverable oil and natural gas resources of the united states exclusive of the federal outer continental shelf. the amount of the undiscovered technically recoverable resources changes over me because of advances in the geological understanding, changes in technology and industry practices and other factors. this necessitates the resource assessment be periodically updated and taken into account the advances. recent examples include usgs of the balkans for asia and the u.s. portions of the basin. this assessment released in 2008 shows an estimated three def 3.4 billion barrels of undiscovered technically recoverable oil compared to the usgs's 1995 estimate of 151 million barrels of oil. our geological understanding of
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the basin he evolved since 1995 and significant technological advances redefined what was technically recoverable in 2008 compared to 1995. another kid was the usgs as some of the gas hydrates from the alaskan slope. as the result in the understanding of the emerging resources, the usgs assessment estimates th mean of 85.4 trillion cubic feet of technically recoverable gas from the gas hydrates on the alaskan slope. research and challenges remain to determine if the technically recoverable resource will be economically recoverable but the current multi organizational including the usgs and multi disciplinary efforts focusing on the overcoming of obstacles. usgs is conducting its systematic inventory of the technically and economically recoverable coal resources of the significant bids in the united stas to provide a comprehensive estimate of how much of the nation's coal and all it is actually for the development and available under the certain market conditions and mining concerns. the first base and us west is the river basin of wyoming and
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montana. the usgs as some of the powder river basin will be the most thorough comprehensive inventory of the nation's most significant base and to date. this inventory with the others on the schedule will provide policy and decision makers with important information of the valuable planning tools. the usgs also evaluates renewable resrces such as the geothermal industry. they recently completed a national resource assessment the first one in moe than 30 years. the usgs assessment indicates the full development of the conventional identified systems could expand the geothermal power production by about 260% of the current land total in the united states. the estimate for the unconventional enhanced geothermal systems is me than an order of magnitude larger than t combined estimates of both identified and undiscovered resources. if successfully developed they could provide an installed geothermal electric power generation capacity for about half of the current land power generating capacity of the u.s..
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energy resources assessments are traditional strengths of the usgs. they will continue to seek ways to expand its research and assessment portfolioto better include comprehensive suite of energy resources. their resources assement and research can provide valuable information for the public and government discourse about the energy resource of the nation. the usgs looks forward to working with congress and examines the challenges and opportunities. thank you for this opportunity to provide an overview of the usgs research assessments of geologically based resources and i would beappy to answer any questions. >> thank you very much. this is an all-star panel i tell you. [laughter] next dr. jean of the energy research you are recognized for five minutes. >> mr. chairman and members of the mmittee on behalf of the congressional research service i would like to thank the committee for its invitation to testify today to address the
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subject of rising gasoline prices and domestic resources domestic energy production printer but to the economic vitality of the nation and reduce its reliance on foreign energy resources. much of the energy production takes place on the federal land or federally owned our continental shelf. congress has worked hard to ensure resources to double on federal land provide revenue to the american people through the least purchased rents and royalties. but energy production like many industrial process these involved some risk to human health and safety and to the environmental quality. thus numerous laws have been passed in recent decades to ensure energy production in the united states is done in a safe and responsible manner. policies have been established for statute and through federal agency will making to provide a controlled access to federa
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land and regulate the activities of energy production. the purpose of my testimony today is to describe the responsibilities and authorities of the federal land management agencies and through that description to outline the process is that energy companies must navigate in order to export, develop and produce oil in the united states. there is an ongoing tension between the expansion of energy production and which companies seeking access toederal land and water to find and produce oil and regulation by federal agencies to ensure that the exploration and production proceeds safely and with minimal environmental impact. the tension has been especially high in the week of the deepwater horizon event. access to the oshore federal land for the energy exploration and production is managed primarily by the interior department's bureau of land management and by the u.s. service in the department of
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agriculture. resourceon the federal outer continental shelf are managed by the bureu of ocean energy management regulation and enforcement in the department of the interior. each of these agencies develops land use plans and resources management plans that determine how and when a federal land and offshore areas are developed. the plan for onshore develoent seek to accommodate the uses of public land including energy mineral development, grazing, recreational activities, timber harvesting and preservation of wildlife habitat and waterways among others. offshore development and must coexist with the fisheries, shipping, recreational the activities and preservation of marine ecosystems. resource management plans are developed with public input and must comply with the requirements of the national environmental policy act, the endangered species act come here and watervliet to leave the water regulation and several other applicable statutes and
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regulations. each resource management plan inudes a schedule of ergy and mineral leases for the planning units. the leases for oil and gas on federal land and offshore are sold at public auction. the winning bid for a particular parcel purchases the lease and ins the right to produce oil and gas from the area. the holder must pay rent on the land and royalties are paid on any oil and gas produced. a portion of the royalti is shared with the state's. the owner of the least must obtain a permit to drill on the lease. the permitting process is also guided by a number of laws and regulations including several new requirements instituted by the interior department after the deepwater horizon incident. the process of approval on an application for a permit to drill is affected by the ability of the federal agenciesto process the application as low as the ability of the permit
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applicant to meet the requirement for approval. other and on procedural issues may delay or prevent wheel and gas development from proceeding on a particular lease including a shortage of drilling rigs or other equipment, shortage of skilled labour or issues associated with the company's financial strategy. legal challenges against the government or against the energy company might also delay or prevent the development on federal leases. in summary, the process of leasing federal land and water, the approval of permits to drill and the logistics exploration production are lengthy and complex process these subjects to large number of laws and regulations which make simple characterization's of the overall process difficult. thank you for the opportunity to provide this information on behalf of the cogressional research service. i would be glad to answer any questions. >> this is -- i have to tell you i am impressed with these three
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witnesses that have hit on the mark. we have to come up with an award i think for that. >> if the chairman would yield we should point out that as the witnesses come on time with their testimony we judge testimony on both content and quality. [laughter] and on both scores they are doing well. well i'm glad you said that because the next person to testify is the ranking member -- [laughter] who wasn't here. we have been called to vote but we have time and i want to give the courtesy to mr. markey to make his statement and then we can go to the boln and come back. mr. markey, following mr. rosh's lead. >> thank you and happy st. patrick's day to you. the reference in the title of the hearing to harnessing american resources is approprie because we are in a horse race.
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but rather than a blanket of roses at the finish line, the winner gets much more valuable prizes, lower unemployment and lower energy prices for american families. there are two horses in the race, the old horse that has been running flat out for decades is natural baby drill. it is owned by a syndicate of the richest international oil companies in the world and opec. the second horse, a much more recent entry in the race is clean energy. that horse is owned by the american people in partnership with researchers, investors and companies developing new technologies to produce eney from wind, solar, geothermal, highest row power, omass and other renewable sources to get our republican colleagues in claims about the race but they are handicapped in is highly suspect. first they say they want a fair race and claim they would be happy to see both forces when.
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it is is they're all of the above claim that the truth is our republican friends have taken a terrie risk. they've put it all on just one horse. they bet billns of dollars in subsidies and tax breaks not to mention that in our economy and future all on the tural beebee koza -- drill baby drill stands on seven hearings based on drill baby drill and 01 clean energy. the republican majority also claims that the obama administration is pulling back the reins on drill baby drill. the trouble with this adnistration is riding the horse as hard and fast as ever. republicans want to debate permits or a curse or tenure projections, but let's just cut to thechase. thamount of oil and natural gas produced from our public land has gone up every year of the obama administration, period.
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.. know how many subsidies or tax base the day, the price at the pump remains beyond our control. the harder we with the wors worst comes to further the finish line seems. at some point, we have to fe facts. the republican energy policy
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amounts to nothing more than beating a dead horse. so what might happen if we get serious, clean energy out of the gate? well, the first thing you need to know is that clean energy can catch up because it is incredibly fast. just think about the speed of the arrival of the internet for the last time between directory dial phone when this country puts its mind to something. i'm rachel bebe cho, the longer that clean energy run, the cheaper it gets. is it worthwhile for solar this is a timely double production to the cost of solar panels dropped 18%. the investment we make is the best that we've ever made. the most important clean energy we can win -- the most important is that it clean energy can win this race. while trilby be drilled is in
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place, clean energy is moving forward. this horse will create new jobs, american jobs, developing american tech eleg. and this can cut energy prices by reducing oil imports. if we unleash green energy, let her out of the starting gate, we will find ourselves in the winners circle in no time at the country, looking over our shoulders at number two in three of the world. that is our opportunity and that is the conclusion of my opening statement with 17 seconds left to spare. i thank you, mr. chairman. >> europe to the challenge. i think the ranking member for that. we have two votes. the committee will stand in recess until approximaty 11:00. hopefully we can do it before that, but no later
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>> the committee will reconvene and we will continue with our panel and i went to thank all of you for bearing with us while we have votes on the floor to introduce.your thoughts. your recognize. >> thank you and i think members of the committee for inviting me to serve as a witness. hydrocarbons are exceptional commodities that it proves living standards and quality of life. they are commodities and surprises are variable. races are variable for many reasons including actions and events. we are at a time in which events
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are exceeding expectations about christ is without leaves us with the number of questions. what do we do about this? had we managed it? what kinds of things we think about? to me, one of the most important things is to ensure the domestic can remain abroad. it's as if a charter for the industry and government. a good way to start is by understanding the business cycle. ivo and many people like me, tend to view the interview cost structure on the basis of full breakeven costs. not just what it costs to sink a drill bit and truly well, but stay in business. somebody has to be carried by companies to do what they do, to hold ended torry, regardless of whether it's public or private leases, to pay for geological and geophysical staff -- engineering staff, to explore, to do research and to your
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family ready to do a chilled bowl prospect. full breakeven finding and development cost for high and have been raising for a number of reasons. part of it is because they are abundant. resources are everywhere, but they are -- kosovars are complex and so i complex and so it commits a cost of extracting additional barrels per cubic feet of gas from those resources can be lived. as long as we have the high and rising original cost or, then we will have price variability. so how do we manage the high and rising costs for? what are the kinds of things we can do? one is to look at where we can increase production volumes because the more that you can produce for a given dollar invested, the better off you're going to be. natural gas offers one way to do that. we have an abundant natural gas
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base. it also has high structure, but we can already see improvements being made to bring costs down. we can understand the cost the company states are affected by many names. policies, regulations and other issues. we can understand that companies need access to resources in order to be able to maintain portfolios that can be used to develop prospects. replenishing production is an essential part of maintaining competitive foreignness in the domestic business. protecting private property rights and ensuring access to private plans is just as important as ensuring access. our show cast has succeeded largely because of private mineral ownership and the ability to negotiate access of private owners. but we have to look at our
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public lands in the gulf of mexico and reach a point in which we can feel comfortable we can responsibly manage access to those forces, maintain critical science and technology base for offshore exploration and continue to push the production renaissance we seem to be having in the united states in typical of mexico. we can also be problematic history of. we have an interesting situation in which domestic crude is lower than international crude into a large extended because of infrastructure. we need to continue to expand oil and oil products pipeline, not just within the united states, but across our borders. we also need the socioeconomic benefits the industry provides. and these are large and varied and includes jobs, not only directly in the industry, but also indirectly through service companies and local investments in procurement.
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the industry pays taxes. the defection of the larger taxpaying entities. i want to just how the committee's attention to "the wall street journal" that matched her own research on this to the degree to which the petroleum industry pays up to one third of affected taxes for the united states. much larger than internet-based companies, which is interesting to think about because i don't think i can put a spoke in the gasoline tank. the final thing is to understand better how energy affects transportation system and the differences between some of the clean energy options we would like to pursue and energy values in gasoline. thank you. >> thank you very much, dr. foss. next we will go to dr. caruso, study for -- you are recognized for five minutes. >> thank you, mr. chairman. good morning to members of the
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committee and a thank you for the opportunity to give my views on the global oil market and implications for u.s. energy policy. 2010 with a strong year and global market, so we go into this period of political unrest in north africa with a fairly strong arc with prices breakout of a range of $75 to $80 a barrel, which they were in most of last year to over $90 before the unrest began. we saw most forecasters expect dean allowed him to be a year in which prices would challenge to the $100 range. so this is a strong market we are in. and i think we now have the situation in libya were about 1 million barrels a day had been
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destroyed to. last year, opec began increasing demand. non-opec supplies were increasing. and that's going to continue. most forecasters now believe that given the uncertainty about libya and whether it will spread are now looking maybe two at $10 or $20 to that price. we have seen already between five and $15, depending on your views of a pure premium in the oil market. despite these demonstrations, the most important concern is will it spread to algeria, were demonstrations have existed, even to places like saudi arabia, which so far has been a spirit of any disruption. we have the capacity to meet the
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1 million-barrel a day decline in libya. if it spread, who will most likely require and the president has said that the administration has prepared to use the spr, should that become necessary. assist in marketing to adequately supplied rate now. i think that the proper course. but continuing monitoring, continuing working with partners within the iea and others in the oil crews and communities, probably the right thing to be doing now. however, the spr is a powerful tool, should this disruption increase and it could be used to manage the exit patient a further risk, which is out there.
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and should the disruption expand may well be necessary in court nation with their partners in the international agent the tuc sbr. opec countries have said they are prepared to add barrels to the mark in saudi arabia has said he done that. over the longer term, of course, we have any issues that of arty pin in many statements here. i'm both a of the equation, reducing demand through efficiency and the increasing supply. i think it is important that the u.s. energy policy recognizes the long-term nature of the investments on both sides of the equation that michelle outlined. come on the playa site. on side, there are a number of things that we need to keep doing, especially improving efficiency and automobiles through policies like café
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standards and other incentives, certainly using market mechanisms to incorporate the externalities of both security and environment into the price that we pay to facilitate development of natural resources that's the important work of this committee. and i think the infrastructure needed to develop things that was mentioned as a potentially large resource for domestic oil and gas. it is important that facilities be encouraged, things like imports from canada should also be cursed as well as continuing to improve on the amount of money spent for r&d to link to detect allergy and innovation
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that both of your opening statements indicated would be required. there are many other specifics, but i'd like to leave that for the q&a and once again thank you for the opportunity to be here today. >> thank you very much, mr. caruso. next we'll go to mr. rusco, accountability office, you're recognized for five minutes. >> thank you, mr. chairman and members of the committee. and please to speak with you about department of the interior oil and gas produced on federal lands and waters. in the context of economic impact of these domestic resources, the department of the interior manages the federal lands and waters for oil and gas exploration development and production. these activities provide an important domestic source of energy for the unit pace, create jobs and oil and gas industry and raise revenues that are shared between federal, state and tribal governments. oil and gas exploration and
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development tv has been correlated with oil and gas races over the past 80 on federal lands and waters has generally increased. however, during the same period, interior has found it difficult to strike a balance between encouraging domestic oil and gas production on one hand, and on the other, maintaining operational environmental safety and providing reasonable assurance that the public's financial and other interests are being taken. i will focus by remaining remarks and out into your can improve its management practices and implementation of laws and regulations to provide reasonable assurance that the interest are protected in that development of federal lands for oil and gas can continue in a timely and efficient manner to contribute to the nations stability. interior has struggled to higher
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train people with enough skills to keep up with its regulatory responsibilities. for example, in 2005, the reported blm staff could not keep up with increased applications to drill. the agency ended up pulling staff were hired to do national environmental lack reviews to instead applications to drill. in 2010, we found the staff is he unable to keep up with the increase for a associated with public protest a proposed lease is envious approval -- lease approvals were late, which created uncertainty in costs for oil gas companies. improving interiors could lead to better protection of the environment as well as issuance of leases. interior does not have a centralized process for improving use of the type ologies of oil and gas leases. at best, this post on the process for improving the tape allergies that can improve oil
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and gas production and a brisket prevent new technologies from being deployed or allow an appropriate technologies to be used. further, interior has not been consistent across field offices in completing production verification inspections and oversight, leaving uncertainty about whether the public is getting a chair oil and gas revenue. creating more consistent practices and interpretations of laws and regulations that benefit both the public and oil and gas companies. revenue collection is a broader concern. and to does make, we reported that interior has not comprehensively evaluated its revenue collection schemes in over 25 years despite significant changes in the industry. the current revenue collection scheme is complex, including payments from companies such as bonuses paid for the right to develop a release royalties for gas found, corporate profit and other taxes and land grants as
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well as subsidies including royalty relief, tax credits and favorable depreciation schedules. interior is currently undertaking a comprehensive study of the system and we hope there will be ways to simplify and improve the complex schemes for the public can have confidence it is receiving an appropriate share of revenue that oil and gas companies continue to view the united states as a desirable place to do business. inclusion, regulation and management of federal, oil and gas exploration, development and production should have two important goals. one is to protect the financial and other interest of the public and provide confidence that oil and gas development is safe and environmentally sound and to reduce uncertainty in any unnecessary regulatory burden on oil and gas industry. striking the appropriate balance between these two goals as importance of the country can continue to enjoy the economic and strategic and effective domestic of domestic oil and gas
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production. thank you. i'd be happy to answer any questions you may have. >> thank you, mr. rusco. and again, i said this earlier. i really do think the panel for adherents. that is very, very helpful and if they mention your full singable appear in the record. we'll begin questioning then i will start. ms. pierce, second stay with you. there's always a lot of discussion about reserves that we have. remember discussions going way back in it seems like when it aeration happens, however it is reserves get larger. i say that's very broadly. boulware and federal lands or waters come up from your research, that currently are not open for development of the largest reserves? could you point out or he cannot fight two or three of those quiet >> so, you probably well know there's a difference between resources and reserves.
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reserves, which is a usgs does technically recoverable. some of the largest producers are open and are producing. but there are clearly areas offshore and i don't want to avoid your question, but i want to do it justice. and so, i would refer to do for it, to the research, look at resource numbers, with soft ltd. provide the answer in writing. >> we want to get accurate information, so that's good. >> and i was going to ask, dr. whitney, you pointed out there's a difference between resources and reserves. and i noticed in mr. whitney's report, they talked about that. could you go more in depth as to the explanation between reserves and resources clacks >> short. >> reserves are amounts of oil or gas that have been proven to it is through drilling.
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companies use reserves as word of an inventory that they will produce at some point in the future. as those reserves are produced, they add new reserves, either through reserve growth and an existing field or through development of new fields. for that reason, reserve values, preserve numbers tend not to vary wildly. they may creep up and down, but over time they don't change very much be keys these are amounts of oil that companies keep in reserve for production. the undiscovered resource is our geological estimate in areas that either have not been trailed or include some field, but extend beyond the seals. those geological estimates are based on several geologic fact
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there is within the base in the region, such as the existence of a source route that is rich in carbon, most experienced thermal histories for oil or gas and there must be the existence or potential existence of reservoirs and traps. so there is a comparison between undiscovered resources and the resources that have been produced in other basins. there is an estimate that is derived from statistical treatment of the parameters and compared to production in other basins. the undiscovered technically recoverable resources re: geological estimate. either way, because they
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recoverable, the number changes as technologies evolve. >> is it fair to say with a comparison then that just in general, resources -- a book that quantifies much larger than reserves because you know pretty much represents our? >> that's right. and reserves typically are composed of volumes of oil that are moved from the undiscovered category to reserves and into production. >> i guess that's why hearing in the past when people are talking about the term used. it always seemed to exceed because resource insert after but. >> that's interesting. i appreciate that. my team is going to expire and so i yield to the ranking member, mr. markey.
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>> thank you, mr. chairman. my republican colleagues like to say we are not doing enough trailing in the united states. a lot of the numbers that have been tossed around by witnesses of fundamental point that i believe our country must comprehend. we have 2% of the world's proven oil reserves. we improve 11% and we consume 25% of the world's oil on a yearly basis. 60% of the reserves, 11% of the oils produce, 25% of the oil we can soon. now, i've put together a graphic to help us to take these numbers together and understand what they mean. this is the noblest tradition at
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the rate at which our country is producing its reserves and compares arab or an rates to of the other top 15 oil-producing countries in the world. what do we learn? no other nation on earth is matching the burn rate of the united states in terms of consuming their own reserves. we consume more than any other nation. we are burning through our savings, our reserves faster than any other country on the planet. as you can see down here, and iraq, then assail the, they have very low birth rates. in the long run, is a shot which obviously is going to cost our country great problems.
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i guess what he has to you, mr. carissa, is the burn rate of our reserves sustainable over the long-term? yes yes or no? >> ultimately, we will reach the peaking point and we did reach that in 1872 in terms of domestic reserves. how long can it go? it can be a very long tail, but clearly we will be, based on anybody's forecast, we will be importing a significant amount of oil for his falling out as can see. >> mr. rusco, do you agree? >> know, unless we discover some new reserves were developed more
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reserves -- it can be sustained, but at most likely declining. >> and do you agree, mr. rusco? >> yes, inevitably at any rate of production, we will eventually reach a total be followed followed by a decline. we have reached a peak, but they are maybe a long tail. there's a lot of hydrocarbons out there and we don't how fast will be a lot to produce them. >> which countries are the oil-producing countries in the world? which of these countries benefits in the long run most from the fast burn rate of the united states in terms of its oil reserves, mr. caruso? >> well, the opec member countries at the ones that have
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been most determined to manage the praise. they aren't always successful, but clearly i would say in general, opec countries are benefiting. >> do you agree with that, mr. rusco? >> yes, i would say that loyalty in a global commodity, in some sense, it really doesn't matter where the oil is produced. price is determined by oil demand globally, and the benefits and costs of that accrue globally. >> in this context, the faster we burn down our reserves, the more powerful in the marketplace those that have massive reserves the balance of the century will have in terms of influencing the price in the market for the work of the cartel, which united group that, mr. rusco?
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>> i agree i agree about the cousin successfully managing the price and that is a long-term strategy. >> but gentleman stands at higher. i now recognize the gentleman from louisiana. he met thank you, mr. chairman. first of all, went to complement the panel because this is some of the most cogent and formative stuff we've had in a long time here. you know, we are approaching in some cases past $4 a gallon for gasoline. and just as the law of gravity of everything must come down, the same applies to pricing for commodity. it's all about supply and demand. we do see some spikes at times when there are disruptions or economic issues that may come up. the underlying pricing is all about supply and demand.
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what is interesting is that to the two worst analogy, where you have alternative energy reasoning the fossil feels for hydrocarbons, what we see particularly is an explosion of discoveries we didn't know we had. and also with new technologies that can exploit to get to those we have in unable to before. ..
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the prices of oil or other commodities would represent a threat both to economic growth in overall price stability. now we hear the obama administration would rather release oil from the strategic petroleum reserve, when in fact we have as i understand now 1.3 trillion barrels of oil equivalent in the ground just here in the united states, which is the largest in the world. so, despite some of the things that you're hearing today, information is coming from your agency and is telling us that we have a lot of stuff we can use for many years and that is the whole problem with alternative sources of energy is it's still not competitive in the
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marketplace. why? because overall we still have a very abundant supply of energy ahead of us. but what's interesting is in 2008 now energy secretary chu told "the wall street journal" energy prices are the linchpin to an energy overall. somehow we have to figure out how to boost the price of gasoline to the levels of europe. so we actually have people in washington who are working to get that price up when the rest of america is going to the pump and seeing a 50-dollar fell in their car jumped $75 that's crunching the family budget. so i would just like to have some responses to some of the other panel members today just real quickly how you may respond we will start maybe to the far left over there, to my left, your response to some of these comments and statements that we've heard today.
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>> in terms of what specific aspect -- >> well, about -- i think that you are hearing different versions. what is our ability to be energy independent in this country using hydrocarbon, realizing the we've gone from 30 per cent dependency overseas tunnell 60% and we are shutting off anwr commission and of offshore drilling. we have it under attack which would severely construct our flow of natural gas. what in your opinion is the future of hydrocarbon if we are allowed to exploit those and how it affects prices. >> well, currently coal, natural gas and petroleum provide the vast majority of the u.s. energy supplies over 80%. you know, our projections over
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the next 25 years which would assume the continuance of the current law and regulation would see a modest decline in the fuel share as other sources of energy, renewable energy in particular increase. but at least in our outlook for others to be a sycophant change from the current share of fossil energy system something would need to change in the current policy and other market trends we are not currently for seeing. >> the gentleman from new jersey is recognized. >> i thank the witnesses. the members of congress always like to think we can term short-term news stories and to immediate political benefit, and this is no less true with
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short-term news about gasoline prices, and i guess i would try to draw our attention to other longer-term implications of the news today, which is uprisings in the middle east show how perilous our dependence on petroleum is and the melting nuclear melting in japan shows how perilous our dependence on nuclear power is and they underscore our failure to have a broad based energy portfolio and our failure to have a rational look at our energy usage. mr. russo, - to set prices are determined by supply and demand globally, and several of you have said that sort of thing.
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let me ask i guess the first mr. newell, what is the scale and let's put it in perspective here of possible short term energy production. i mean, suppose there were a lot more leases for offshore drilling released in the last couple of years to hear the curious oppose or even a in the drilling on private land. what is the scale of the increase in production we might achieve compared to what opec can do by turning defaults up and down in the short term? >> welcome there is a considerable lag in the increased access resources and
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an expiration and the element and the ultimate protection of the resources so there's an important issue would return to the time scale which i think you mentioned in the short run to respond to the immediate impact send crude oil supply one needs to look at the availability of the ferre production capacity in opec which is where that currently relies. in terms of the non-opec countries tend to produce available capacity at full production certainly in the short term that's where the available spare capacity -- in the longer term various -- >> i'm talking about short-term. >> in other words just to make sure we are clear on this, opec can affect the price of a barrel of oil rather quickly compared to anything we could do by production in the united states.
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and i stating that correctly? >> i would say that's correct. a vast majority of that is in saudi arabia. >> there are so many things to cover, but let me just pursue this point a little bit longer. mr. marchi pointed out that over the longer term this would be more and more true, will not? because if the u.s. is warning its oil reserves faster than any other nation and it is largely opec countries that are burning through their reserves at a much, much slower rate than we are, that means they will have more and more leverage than we
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will in future years. if we have 2% of the reserves, he 11% of the production now and 25% of the consumption. am i describing that accurately? please, mr. newell. >> opec countries currently provide about 40% of the global oil liquid supply and old non-opec about 60%. we and most other analysts i've seen expect the share will increase over time because the vast majority of reserves of oil are located in the opec countries. >> and because we are burning through our reserves considerably faster than they are so we will have a smaller and smaller share even if some of these larger possibly economically recoverable by some stretch of the imagination are out there is that correct?
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>> you can shortly after. >> the time of the gentleman has expired. and if you would like to respond back in writing i'm sure that mr. holt would be appreciative of that. >> the gentleman from florida is recognized. >> thank you, mr. chairman. i wanted to ask -- i know all of you have probably read the report that was delivered by the commission the president put together regarding the disaster in the gulf. and i'm just curious because seem to understand this issue as good as any panel we have seen come before us. i'm just curious, i asked members of the administration this question and i'm curious of your answer. in light of the president's statement that he believes holley oil prices are acceptable he made that statement
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august 20th 2008 that it is a necessary occurrence to push us in a direction to make us explore other energy sources, and it seems that with the department of interior's issuing a 720 violations to bp, which is bothersome to me and not rescinding the jones act, in light of that to help contain the oil spilled into the goldfine just curious and this is a yes or no i'm going to run down the line here. mr. rusco, does the government bear any responsibility, any? for the disaster in the gulf? >> the commission said -- >> i'm not interested in the commission. it already been here. i'm interested in what you think
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i've got time, yes? >> yes. >> yes. >> yes. >> no, you're on the panel, just you and me talking. forget all these other people. it's just you and me. give me your opinion, ms. pierce. >> [inaudible] >> i understand it's difficult and that's why i asked it but it's really not that difficult. 720 violations cited, refusal -- and this is my time, that's right, asking the question. yes or no? >> [inaudible] >> you don't know? so the 720 violations and the refusal in containing the action and rescind the jones act, in light of what we have seen, the underwriting of the oil exploration in countries like brazil by this administration you're telling me the government
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has no responsibility and mr. salazar is an amazing man and has 70,000 employees at his disposal of 12 billion-dollar budget to can focus like a laser beam as he stated last week in testimony here. do they bear any responsibility -- 1%, 5%? >> [inaudible] okay. and that is where that oil -- the well was? thank you. mr. newell. >> the congressman, respectfully i have not evaluated the issue and so i'm going to decline to answer. >> really? you would rather report -- >> with the gentleman yield? >> yes, i would. >> it's difficult sometimes when you call members of the administration albeit different agencies to respond on those questions in deference to my friend, and i know very well how focused he has been on that but i just wanted to make that observation. >> let me ask what my remaining
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time -- with the remaining china mr. newell, do you believe with the decline of over 250,000 barrels per day do you believe this will cause job producing companies to remove their rigs from the gulf and move to other countries are not of the world? >> in the short-term energy outlook we are having a decline of 250,000 per day relative to last year in the offshore gulf of mexico oil production which is maybe roughly half of that one could attribute to the well below what moratorium and subsequent regulatory situation. the other half is due to possibly natural decline because we've been on an upswing in the production in terms of they're certainly job losses associated with the coin production there in terms of their rigs and their specific location early on there
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hadn't been much movement of the rigs. to be honest i haven't recently tracked exactly where they are and so i couldn't comment specifically on that. skimming the ones missing are not in the gulf? >> so they are somewhere. they are somewhere. we know their somewhere. they are not where we would really need them to be though. we know that. >> correct, there are rigs that are moving? >> it's true at some point in time they will move on. early on the last time i looked closely they hadn't because they were waiting in anticipation that there would resume and so at the point in time when i last looked there hadn't been significantly movement but there was a while ago and so i can't comment on mix ackley with the situation is today. >> the time of the gentleman has expired. >> thank you mr. chairman.
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>> mr. speaker to come in your statement on page two you said that what you're about to discuss in your report did not take into effect what happened in japan and japan would definitely have an impact on what you are looking at this short term energy outlook. can you tell me if you were to calculate that into your statement here what would have an impact? >> sure. the short term production and price outlook reflected in the testimony is from the outlook which came out a couple of weeks ago and since then we've seen significant fluctuations in oil and gasoline prices. in terms specifically of japan, yesterday in terms of immediate response we have seen the decline in the oil prices which i think most of us with associate to a concerned about to be the decline in the economic activity, immediate
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decline in the requirement for fuel but also brought sense that there was a hit to japan's economy and has global implications. as of yesterday, the price of oil was down significantly. today it is up again. so in terms of how this shakes out there's a number of things going on right now in the global markets. there is the principal on rest in the middle east and north africa. japan was weighing on that yesterday, but today it seems the resurgence is more associated with again turning to the unrest in the middle east and africa so the same thing would have to reflect the effect of japan we will see over the next several weeks how that unfolds. >> my next question is for mr. caruso. you are in some reports the you've been quoted in your speaking about the release of the oil from the strategic petroleum reserve, and for all of us the main question is how does that then translate to the consumer? can the consumer expect some kind of release if we were to go
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to the releasing of oil from the yes br? could you comment on that? >> i think it depends on the amount and the duration of the release. but we saw both during the iraqi invasion of kuwait and the post-katrina releases that were presidential drawdowns that did have an impact on lowering the price of oil from where it was before the release and after so it depends on specific circumstances and a significant release for a relatively long duration which in my view would be 30 days or more and could have an impact on the price depending or whether or not the opec countries might respond by reducing their production. so it's a lot more contingent on
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what happens elsewhere in. but in the specific answer is it could have an important effect depending on the volume and the duration. >> is their anything else that could have an impact like that in the short term? is that our best tool to reduce the price for the consumer right now that you can think of? >> added that particularly if it is done in cooperation, coordination with our international energy agency point partners is the most important short-term crisis management tool we have in our arsenal. >> thank you. my next question is for the director rusco. it seems to me you are talking about two different things in your report. one is the revenue for the interior feel your i guess for the lack of a better description for the monitoring of the
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revenue source. and second is the permits and what is going on. can you tell me if in fact the permitting system or the leasing system by the interior has really resulted in the loss of the revenue? >> that's very complicated, but we do think that the efficiency of the management of permitting leaves a lot to be desired and could be done in a more efficiently if interior could do better work force planning and better management of its human capital assets so that it had the right number of people to respond to changes in either applications to drill or nominations for land to be leased but also to respond to public protests of the leases and it hasn't responded to those
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kind of changes very effectively in the past. so there have been delays. the delays on the leases associated with protests have been a matter of months though not years or anything like that. >> the time of the gentlelady has expired. the gentle man from colorado. >> i appreciate panel taking the time to be here today. i'd like to start with mr. newell first. i've come out of the district of colorado to where we have a tremendousosed to opportunitie
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certainly going to be there. thank you mr. chairman for your time. >> the time is expired. the chair recognizes the gentleman from michigan. >> thank you, mr. chairman. first, just one states code debate point made by mr. the sutherland. the point of the verification. there are more rigs in the gulf mexico than before the be peaceful. there are now 125 rigs in the
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gulf compared to 1221 year ago. i just wanted to put it in the record. but i have a question of mr. newell. speculation is often pointed as a cause of rising or unstable oil prices. to help prevent harmful speculation, last year's paul st. reform regulation included provisions to regulate the commodities futures trading commission. however the spending bill would cut funding for the cftc by $56.8 million almost one-third of the agency's entire budget. despite the chairman of the cftc recently testified before the senate agricultural committee. but the cftc already doesn't have enough funding to properly enforce these provisions under
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the wall street reform bill. can you speak to the role of the speculation and the price of oil and the difficulties of addressing this problem on h.r. one would reduce the budget of the agency in charge of cracking down on speculation by almost one-third. what i am asking you is your position on the role of the speculation and whether we should be cutting the money used to scrutinize and enforce that speculation. >> welcome to the first part of your question, if you know, speculation clearly has a role in oil and other commodity markets. because commodities in particular are storable there is always going to be in anticipation or expectation by what the price might be in the future and therefore, there will be actors in the market making
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basically voicing their opinion through the marketplace about how they think that prices will change over time. in terms of the role of the regulatory agencies, the agency i had is not a regulatory agency, the role of the regulatory agencies like the commodity futures trading commission is to oversee the transparent and efficient markets. the proposals they are developing relate to the position limits in energy commodity markets. the intent of those is to prevent excess concentration of any protractor in those markets and therefore from the market efficiency point of view the role of that is to prevent any undue influence on the market prices. but i would -- de fer in terms of expressing for their opinion on the role of the regulation. >> the congress last year introduced or felt the speculation did play a role and therefore the past legislation
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which is the lobby of the nation to try to scrutinize and regulate the speculation, and i guess we want to know whether we should be -- if that made sense in the first place would be cutting the budget of the agency that is to look at that speculation. it's not a huge budget in itself, 56.8 million. you want to cut by one-third. to see that as a prudent thing to do. >> i think i will decline. i think they are pretty loaded with policy implication so i'm going to decline in opinion on that. >> i invite anyone else who wants to comment on that.
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>> as the gentleman yield back? the gentleman yields that his time and i recognize the gentleman from pennsylvania mr. thompson. >> thanks for calling us of this hearing. this $3.54 a gallon today. i come from a district i guess we started this whole situation with the drilling of oil within walking distance my district office in titusville i take exception with one of the comments made by one of my colleagues. i have to tell you there are families in independent travelers, small businesses, the controlling oil for generations for 151 years. so this is not a big oil is not an issue with me. this is about small businesses and jobs and energy security. just one quick note i thought was interesting to read the chart shown in terms of earnings for the reserves, the country with the next the closest burn
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rate to the lowest portrayed in the united states, the united states of a 330 million americans population, norway 4 million. so, the size probably does have a bearing on how much we use. my question -- those are all about the current -- one quick question that should be very easy and i will just open this to the panel is is there any renewable fuel which would take the place of oil in the next decade we will say? yes or no based on your experience we will go down the road if you could. estimate in terms of the fuel that would replace oil over the productions in the start of 2035 is biofuel for the four so far -- >> suit to 35, i will take that as a no sense i said a decade.
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i have a number of questions if we could -- >> we don't see petroleum being reserved in a decade. >> thank you. >> no. >> no. >> of the century. >> not this century, there you go. >> i would refer to the eia. >> very good. appreciate it. mr. rusco, this is a very basic question but i think it's important for people to understand. tell us who owns the oil natural gas on and off shore on the federal land. >> who owns the gas on federal land? >> on and off federal land. certainly based on that i'm sure you agree that that's owned by
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the american tax payers or i guess not all of it is on federal land. how much would you estimate to be the american taxpayers? >> i don't have with me an exact figure for that. it refers to all of that so that would be under the private land. offshore in the federal offshore is about 64 billion barrels which is federally going into effect by the public but there's more than that. >> based on the as as i have to have confidence in the stuff that is the resources are privately owned. it's the issue we brought up against is the taxpayers own that would have a good job of production triet >> of the 219 let me move on some of the maffei tried to do some basic math, not a strong suit of mind, qalqilya
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approximately 814,000 square miles of the lower 48 offshore miles placed off limits by the president, noeth lease, we are not talking about the gulf of mexico. we are the most to recent leases were released so it was the remaining part. so, the 814,000 square miles off lease. that's nearly 521 million acres or five times the size of california. mr. newell or ms pierce, can you tell how much oil, natural gas are contained in the 521 million acres and as a part of your answer, would you tell us when the last modern seismograph inventory was taken of the offshore oil and gas? >> i will defer to brenda on the second part. in terms of the major part in terms of areas currently under congressional moratorium would be the central and eastern gulf of mexico which i believe is
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six-point something billion barrels. that is the most promising area in the gulf of mexico and also in terms of what is available on the pacific and atlantic coast is the gulf of mexico where the vast majority of production is already occurring so that is the central and eastern part under the congressional moratorium of 2022. >> in terms of the seismic i would have to look at some of the numbers. some is recent and dated several decades old depends upon where you are in the outer continental shelf. >> the time of the gentleman has expired. mr. defazio. >> thank you mr. chairman. mr. newell, on page seven in the middle of the testimony given the increasing importance of the opec supply in the global oil supply demand and the other issues how they respond to the increase in the non-opec supply in our production potentially offsetting any direct price effects. we hear this all the time. it is a world market.
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and for years starting with the bush administration the clinton of the mission, bush administration, not the obama administration might ask we file a complaint against opec for the legal commodity manipulations under the wto. i am told that it's not covered. well, the only exception is for conservation purposes. opec never pretends to be conserving their oil. they are setting the market by granting of the production up and down. they tramped up because libya, they have a price target. so, if we produce some additional oil is that likely to change unless lisieux opec and go through the wto process and break the cartel? the can easily offset the productions here by dropping the production there. >> i think that's correct. >> thank you. >> and second, i would engage
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anybody on the panel in pushing this issue and legislation. i've written bipartisan problem pushing the administration, clinton administration of the obama administration special trade representative will not take on opec. i guess we are scared of them for some reason. second, mr. newell, the enron of loophole or the commodity speculation, you spoke as though we had set a stringent new limit on the the market's for the players in the market. as i understand the financial service reform accepted people who are not in accusers from this, particularly hedge funds and others and the other regulations for pension funds and folks like that haven't been promulgated yet. so we don't have very significant restrictions get on people accumulating large numbers of contracts, dewey? >> i don't have an opinion on the relative stringency of the
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cftc regulations whether that is too much or too little. >> right. but, okay, the point is you are saying there is little or no effect by speculators. there are other experts as saying there is a dramatic effect by the speculators on the market because right now there is not an oil shortage but we have seen the prices run up very dramatically to the nitze if there isn't a shortage and we are talking about supply and demand one with the price run-up so much if there's a balance between supply and demand? i think there's only one other -- it has to be problems with speculators, it? >> there's been a number of factors over the last several months of driven prices higher. there's been a rebound in the global economy and i know that is sometimes hard to appreciate here because the u.s. still has a high unemployment rate but there's been a rebound in the global economic growth that has led to visit the degette resurgence in a global demand service that brought prices back up in the the 75 to 85-dollar
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per barrel range in the last quarter of last year there was increased high demand for the fuel which led to the fourth increase in the prices and on top of that we had the recent unrest in the middle east and north africa which has on several of the market and has taken about at least a million barrels per day of the market and has also unsettled during the center of the -- >> and they have so i guess the question is where is all of that money going? i know where some of it is going. exxon's profits last quarter of last year was the largest quarterly profit for any entity in the history of therly proces? that's just supply and demand, no speculation involve criminal
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manipulation, nothing. u.s. consumers just say that's the way it is. is their anything we can do about this? >> if we let all the leases we discuss that because opec will just drop -- they want to keep the price target they can keep it. we want to come into the wto. we've got exxonmobil operating with such market quotes they can drive the market, too and increase their profits 53% in one year. it's extraordinary. do you have suggestions how we can deal with that? we of long-term issues by supply and short-term issues about people being screwed at the pump right now by big oil and opec and we are not doing anything about it. >> the time is expired. the gentleman from georgia, dr. brown is recognized.
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>> thank you. i believe very firmly the nation cannot he did so for close itself, it is not energy independent it's not a secure nation. we are not a secure nation because we are not energy independent. the department of energy was founded during the carter administration as we all know to make us energy independent. it's been a an abysmal failure in that charge. the nationwide the gil troy gasoline is about $3.55 a gallon. this is the highest price ever in the month of march and is over 40 cents higher than just a month ago. the skyrocketing gas prices in a risky dependence on tools supplied by volatile for innovations such as libya for the american energy policy that emphasizes production and decreases our reliance upon foreign oil. the united states is the only nation on earth that bids development of its own god-given natural resources. we've been blessed by our
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creator with abundant natural resources and we shouldn't be hesitant to tap into it. especially of the time when the energy cost is so high. however, since taking office the obama administration has done everything in its power to block of our energy resources even more with the defect code moratoriums. the production of the gulf of mexico alone has declined by 400 barrels -- 300,000 barrels of oil per day just due to the obama administration's actions. energy is the lifeblood of american economy. our nation's economic prosperity is closely tied to the availability of the reliable and affordable sources of energy. unfortunately u.s. energy production has grown by only about 13% while energy consumption has grown by 30% since 1973. at a time when 9% of our citizens are unemployed in the
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district we had 17% unemployment. food prices are giving high with a still struggling economy we must do everything in our power to allow the responsible use of our known american supply of energy. now doctor, it's been proposed by the obama administration of tapping the possibility of tapping the strategic petroleum reserve. does this make sense at all or should we develop the known resources that we have here in the united states? >> i think the psychology of the marketplace would be much more significantly impacted by the decisions that affect us long term rather than now. i don't think -- this is my own opinion. i don't think that the release right now would matter much because i don't think we have an inventory problem, we have if your problem about the future. we have expectations about the future, uncertainty about how events will unfold in the
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critical producing region and uncertainty about policies here and investment actions here, and i think that symbolic steps, meaningful steps that indicate we are willing to make sure we have a robust industry here would have much more impact on the treaters and treaters ecology and market psychology than using the spr. >> thank you, dr. foster to devotee tapping into strategic reserves is not sound policy and i think that it is an aim to even consider doing so. there are other things we can do. i take the first time a drill hits the ground and starts drilling in anwr you will see the prices come down worldwide. but what can we do, doctor, here in the u.s. to lower the gasoline prices? >> i think some good points came up in the panel today both on the supply side ensuring that
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the moving portfolio of resource reserve production conversion is able to continue to function the right way. so that means looking how the industry operates and ensuring that appropriately given 000 for site is there but that it's done the right way. streamlined, sprint, everybody can understand it. the public industry and the government agencies that are involved. the industry has to be able to maintain portfolios of the prospects. and people have to understand what that entails in terms of both public and private mineral leasing access to resources and the investment cycles that are needed and then on the demand side i think some key points were made considering how malleable the hydrocarbons are because of their energy content
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we should use them wisely and i think by now we have the reams of research show how much we can gain by affecting things like combustion engines, performance in vehicle technology that allow us to get basically more bank for the buck for every gallon of gasoline we use and that's what we ought to focus on. >> my time is expired. >> thank you. i now recognize the gentleman from louisiana. you don't have a witness here that speaks the same language like you do yesterday but you are recognized for five minutes. >> i'm going to try. i have a lot to ask. i never have enough time. [laughter] i want to make one quick comment that i'm certainly glad that mankind didn't calculate the perils or perilous circumstances of the voyage by 400 years ago so that they could find the great country. i guess that is why my colleagues on the other side of the ogle are mad.
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they didn't do the calculation. i guess if they would it wouldn't have come over here and they could have been born in europe. but just common sense over here. i wanted to ask, and i don't know if they ask you this i had to step out a couple of different times but last week the president had a precious conference. he made some statements and did the white house call you and ask you to give any statistics on that? >> i'm sorry, what specific are you referring to? >> he had a press conference he talked about production increases and how he was doing a fabulous job of increasing oil production in the country and i just wondered were you in that meeting -- did a brief you and call you and ask you to send them some statistics?
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no, no, that is a yes or no. did they call you last week to ask you to send them some data? >> there is data that comes, yes. >> sent specifically to the white house on the request of last week? speenine i wasn't involved in providing the data. it's very routine -- >> do you know if you send them the data that says in the first quarter of 2011 your agency said the production in the gulf would decrease from 1.59 million barrels to 1.4 million barrels a day. >> are you asking me if the number in the short-term energy all? >> no, no. i know that's your number. did you send that to the president? did you send that to the administrator? because he never mentioned that in his press conference. he just said production was the highest. he's a fellow who gave us our all. did you send that to the white
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house? i'm trying to figure out did you or did you not send these statistics to the white house if they asked you last week was this statistic in there? >> my recollection of what is on the fact sheet was kind of history, historical as opposed to the forecast -- >> don't you think -- >> you don't just send facts, but he evidently tried to influence policy but in forecasts or you wouldn't have run these numbers. don't you think it was your responsibility to send it to the president and say i think you're fixing to make a tignes statement? >> we certainly do not to our forecast to influence the policy. quite the contrary. we do it to inform people about the current state of affairs and the link the state of affairs in the future given what we see in the market and regulatory outlook. >> that didn't answer the question, but do you or don't you agree under the current
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policy the production of the gulf of mexico will continue to decline? >> [inaudible] spec no, no, it's yes or no. pretty simple. it's just is the number going down or is it going up? >> over the next two years which is where the short-term outlook goes there is a decline in the gulf of mexico in terms of offshore oil production. >> and so the gulf of mexico production in fact is in the entire domestic production, correct? so that means if that goes down, in domestic production goes down; is that correct? >> other things tend to lower the rate of change of the domestic production. >> other things equal. >> there is also offsetting effects -- >> such as? >> increased production of the liquid natural gas and increase productions in the lower -- >> i'm glad you brought that up because you see he's taking credit for the increased production but yet there is one project in the gulf one in deep
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water project started under ronald reagan and bush or clinton, and then i think started drilling in bush from a neck to win 99 and the platform set in 2005, 250 barrels a day. to hundred 50 -- to you think there is anything on sure that can produce that much oil onshore? no, no, that's yes or no. that's pretty easy. you know the facts. do you think that there is a project on shore we can get 250,000 barrels a day out a well know. >> thank you. i yield. >> mr. johnson of ohio is recognized. >> thank you, mr. chairman, and think the panel for being here with us today. not long ago we had an opportunity to question
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secretary salazar in a hearing here. it became very clear to several of the questions, and the secretary made a comment that oil prices are determined on an international markets, and therefore america has no influence, little to no influence on the price of oil thereby little control over the price of gas at the pumps. do you agree with secretary salazar, dr. foss when he says the u.s. cannot impact the price of oil and therefore the price of gas at the pumps? >> i disagree. >> would you explain why you disagree? >> we are both a large producer,
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the largest producer, and a large consumer, and i still think we are the largest consumer. it hasn't been passed up yet. that gives us i think market clout we don't use to our advantage and i think there's a lot of ways of exercising that that came up this morning i think through the international relationships for our own actions and our own country through our industry activities how we signal to the will of our intentions going forward. all of those things, how we manage our energy consumption and things we do to put in place to use our energy resources wisely. all of that has impact. estimate it encourages me that you think so, because i certainly think so as well, and as i commented to secretary salazar, it greatly concerns me that our leaders and the administration and in the cabinet seem to have felt their hands are tied behind their back
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and that is a further indication to me as i mentioned them that we have a field energy policy. you are in america and that should be alarming to the american taxpayers. it's certainly alarming to me. another question, he brought forth a budget and one of his justifications for his increase in the budget was so that they could put in a robust permitting approval process in place. i don't have these numbers exactly right, but you will get the intent of my meaning. three years ago, two years ago, 300 some permits approved. a year ago, 100 some permits approved. this year, 30 some permits approved, and we are on the study downhill curve. why do you think it is that the department the interior needs more money in 2012 to go back to
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producing and authorizing permits at a level for which they were doing it for less money three years ago? does my question make sense? we were authorizing 300 plus permits just a couple of years ago. we are down to the 30's in the deepwater area we are now almost none, one or two. but yet they want more money to the robust process in place. they were doing it for a lot less. three years ago. why do you think they need the additional money and increase in the budget, dr. foss, to put a permitting process in place -- help me out. >> sure. thanks for clarifying you were addressing the question to me. >> i'm sorry. >> that's all right. i think that there is a certain amount of public funding that
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probably needs to be used. i'm not a budget expert. there are other people who are federal budget experts and i'm not. happiness the process happens we that it should. but not commission report and around other discussions, there are also additional avenues of making sure that federal areas are managed and administered in a way that doesn't put as much pressure on the federal budget as perhaps some might think. and that includes a range of things. how they function themselves, giving the industry to participate the right way. there are options. >> i just want to rap up with one final question, sort of a yes or no as well. do you agree that we have a small permitting process? >> i can give implementation problems. >> are we proposing the number of permits that we should be
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producing to tap into america's resources? >> i think we need to think about how to implement a permitting -- >> that is a yes or no question. >> yes. >> okay. thank you. i yield back, mr. chairman. >> thank you. i recognize the gentleman from california. >> thank you, mr. sherman. i actually had a number of questions on the permitting today which i will submit and look for an answer in writing because i think that it's the most pressing issue right now actually has to do with the door right. i'm surprised to see mr. marchi's crafts, and i would agree the burn rate -- we don't want to approach was all so we are in jeopardy birding for all of our natural resources. but i think that the chart suggests norway -- if you believe norway and mexico are larger than the united states, that would actually be a factor. or if we only had 2% of the world's oil reserves. is that is actually what i wanted to ask a number of questions on and first of all,
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mr. whitney specifically let me start with the president's statement last week was even if we tap every single resource available to us we can't the state the facts according to the president we only control 2% of the leal but we consume over a quarter. some people are talking about kunkel versus actually what are the reserves. so i want to clarify that the crs did come out with a report and the 2% figure is 19 billion barrels of oil; correct? >> [inaudible] about 21 or 22 billion barrels -- >> and the number that i shall hear from the crs report actually is 140 -- 145.5 billion barrels? >> again, that number has been updated. i don't know the latest number is that it's near that, yes. >> i mean, there's a difference.
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we are saying that 2% is less than 20 billion but we actually believe there's over 145 billion -- >> welcome this is -- >> it would obviously affect the right. .. >> if you understand all of our energy reserves we can obviously balance those different reserves and make sure that we are
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self-sufficient. we want to be self-sufficient and not in danger of war markets. >> right in their other issues we can address. for example the consumption of oil types or transportation system so if the transportation system in the future is converted to an electric system or more reliant on electricity than natural gas, coal and nuclear are fuels for generating electricity, and that could help move us away from consumption of oil. >> mr. marquis's charge of how we compare the rest of the world. 1.3 trillion, how does that compare to the rest of the world? >> it is the largest number in the world but i want to caveat that very carefully because as i put in the report there are some caveats and disclaimers within the u.s.. we have very good numbers for proved reserves and for technically recoverable resources thanks to usgs and
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iea. once you get outside the united states, united states, that data is much, much harder. >> how do we define recoverable? the recoverable is defined by what current technology. >> is killing rich in californid recoverable? >> i'm not familiar with that feel. >> mr. newell, killing rich. the biggest project in california one of our largest states. >> it is existing technology can get resources at some price then yes that would the. >> are we assuming we don't have the technology? i would hope we are stemming we have the technology. >> i was agreeing. as long as you have the technology it would be so yes that would be included. >> that would be included in the 19.1 billion barrels that the 2% the president is referring to?
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>> i'm not sure because that is proven reserve so i don't know specifically whether those have been looked by a company which has an additional set of requirements for it to be considered a reserve. i just don't know. >> what i'm trying to get down to and i have a number permitting question so what i'm trying to understand is when mr. marquis shows a chart 2% and throws off these burden rate numbers and the president talks about 2% are we talking about oil that we know of, oil that is permitted and we are pulling out of the ground or somewhere there in between? >> 2% number is referring to a reserve number which is it proven reserve. technically recoverable resources is a much bigger number. >> the time of the gentleman has expired. >> thank you mr. chairman. >> the gentleman from south carolina. >> thank you mr. chairman and american energy independence is what we are talking about.
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in 2007 and 2008 i served under the previous administration department of interior mms five year planning ocs five year planning subcommittee which dealt with oil and natural gas on the outer continental shelf and talked about the next five-year plan in where those leases would go. and i was amazed during that process how convoluted it really was, because we are very limited on what we can talk about. we were limited to certain grid section in the western gom in one small spot of the coast of alaska and they were both an ultradeep water. in 2005 i went out, probably 2006 i went out to louisiana and it was post-katrina, and we flew out to a deep water production platform and a deepwater drilling platform. the platform i went to us the devils tower floating and 5600 feet of water. we also went to a drilling
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platform which was a pontoon drilling platform for natural gas about 4 miles away and so i've seen it for myself. and, congressman landry has been very clear about the impact of the de facto moratorium on the gulf coast states. the fact that it is not just the energy companies, the petroleum companies that are drilling. it is a trickle-down effect all the way to the smallest welder. it is a trickle-down effect to the states that are hit by this recession that are losing the royalty revenues is a double whammy to an art impact of economy that was impacted not only by this bill which was unfortunate, but understanding from talking with folks is that the companies that do expert -- exploration and drilling have met every requirement of this administration that was put out there in order to get that to work, in order for the permits to be issued but yet to this day we'll may see that to permits
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have been issued. the american people want to see us to deal with american energy independence and they understand it is a national security issue. let me be clear, i am for all, all resources that we have in this country to meet our energy needs. i am very pro-nuclear energy. i am pro-on drilling. ocs in here on the mainland. we have had thanks to the direction of our chairman, we have had ahead of the l. n. and the committee and we have talked about the wildlands act and the fact that secretary salazar fired the secretary of order in december to basically accelerate the designation of wilderness areas. a sickly usurping the power of this congress which has the only statutory authority to designate wilderness areas usurping the authority so now we are saying the federal lands are being taken off the table for energy
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exploration and energy production to meet our energy needs in this country. i think that is abysmal. this administration spoke recently about, and i applaud them for this, about the necessity of increasing domestic production, but actions speak louder than words. so i asked this administration to accelerate the permitting process. let's get the people back in the gulf of mexico that have leases. let's extend the current leases that are expiring because those folks that do to the plate and they bought the rights to explore for energy sources and produce energy sources on those leases. having been on that five year planning subcommittee i know the process that it takes to recommend to the ocs committee the next five-year plan of where those leases should be. it is a long process. and if we started today we are five, six, seven years out for the next release so we have got leases expiring and we don't have another lease sale.
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in fact i don't know when that is going to happen. anwr should be back on the table mr. chairman. it is the size of the great state that i come from but as we talk about the impacted area in anwr we are talking about the size of the columbia airport in colombia or maybe the size of the city of charleston. if i stuck a postage stamp on that wall that is what we are talking about. is time for us to be serious about energy production meeting the needs of this country with american resources for american energy production. that is deep water, onshore and that is offshore. fracking, hydraulic fracturing. james lankford from oklahoma mentioned they have been fracking in the houma for 50 years without an incident. he said come and drink our water. come and drink our water. we are proud of it. we have got the ability to do that mr. chairman. let's not remove this federal land from access for exploration and see what is out there and and than we can produce it. georgetown i saw a sign $4.69 a
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gallon. i think that is the highest in the nation but still it is alarming. $3.95 is alarming. i know what $4.95 of diesel fuel meant to my small business in 2000 i know with the rising cost of fuel means to large and small businesses in this country and it is time for us to be serious about that. >> the time of the gentleman has expired. the gentleman from florida. >> thank you very much mr. chairman. i want to give you an indication of perhaps what is going on with some of the residents in my state in the state of florida where on average the price of a gallon of gasoline in florida is currently about $3.56 which is higher than the national average just a month ago, just one month ago the average in florida was $3.13 and at this time just in one year ago, in my state, the average was $2.82 of this is a
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74 cents or 26% increase over the past year in my state's fuel costs. initially i thought to ask the panel whether they were aware in certain states like florida what the average household income was and whether that household income in florida was keeping pace with the rise in fuel prices and that of course was going to be a rhetorical question. i presume what he may not know the exact amount you would probably all know the answer is absolutely not, that household incomes have not kept pace. so the fact of the matter is according to the latest american community survey put out by the u.s. census bureau the average median income in my state in florida has been declining. people's incomes are going down. so florida families and across the nation are having a harder
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and harder time paying their bills, having a harder and harder time providing for their families. and this administration's policies or perhaps the lack thereof in certain areas are making it even more difficult to provide for their families. and the economic resources are diminishing rapidly. with political unrest in the middle east and north africa the summer travel season picking up in the coming months, and the additional rising fuel costs that accompany it, americans i believe are anxiously awaiting for the administration's plan, for the plan to increase our fuel supply and try to suppress price spikes for foreign supply disruption, whatever the cause is. the american people need to see the way out. what is the plan?
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>> i have a question for mr. newell if you would. according to your agency, production in the gulf has declined by nearly 300,000 barrels a day since last april. berrigan project declines of 200,000 barrels a day or will be for the next two years continuing declines. have you calculated how much in revenue by royalties the federal government and the producing gulf states have lost? >> we have not done that compilation. that would be the kind of calculation the department of interior would do. we have not done that. >> let me ask perhaps dr. foss if you would. this year, the president's fiscal year 2012 budget, the proposed budget includes over $60 billion in new taxes and new fees for american energy production.
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if you couple that with the lag in getting permits approved in the gulf where we have been discussing during this hearing, can you tell us what you believe this will do to fuel prices and whether these actions will encourage or discourage companies to invest in american energy production? >> anything that affects the cost of doing business that breakeven finding and development cost that i mentioned in my testimony will make the resources that are recovered more expensive and the only way to offset that is to streamline other things, for example the cost of obtaining permits or the cost of dealing with regulatory oversight or other actions and increase production volume so that the cause cost could be spread over more arrows for more gas.
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>> anyone else like to elaborate? perhaps mr. caruso? >> no, i think the thing that in that budget that is likely to have a significant effect is the increased cost by reducing or eliminating the intangible drilling, the ability to expense intangible drilling cost. i am told from the smaller independent oil and gas producers that is going to have a significant negative effect on their ability to drill as much as their expert patients were. so i think that in the longer term will reduce the u.s. production. >> thank you mr. chairman.
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>> the time of the gentleman has expired. the gentleman from utah, mr. bush of. >> thank you mr. chairman. i thank the panel for staying as long. ms. pierce i appreciate the conversation you had with mr. tipton about oil shale and i appreciate you saying we are billions of euros actually the energy department believe there are 800 billion of arrows that could be recovered and that is which -- which much bigger than what saudi arabia house. the state share would do a great job in funding our state's education system. as we can tell when the secretary of the interior told by leading his process 77 oil leases have a direct impact on the funding of education in my state as well so i appreciate that comment. i do want to hit up dr. foss if i could with some questions. dealing with what we have talked about so far because it is very clear when gas prices go up and heating prices go up that becomes part of the collateral
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damage oftentimes of administration decisions especially lately so i want to follow-up with what mr. rove there was talking about. in your opinion which americans are really the most impacted by rising gasoline prices? >> the americans has been the most money on gasoline relative to their disposable household income so people who have a larger sale of their household budget. spivak becomes a lower economic strata of our society than? i am assuming that is lower. okay. so i mean it would be safe to say that americans would be the ones who stand to benefit the most from an increase in american-made oil and natural gas production. vis-à-vis the ones who we would be helping the most i am assuming? >> yes, that is correct. >> let me stick with you dr. foss. we currently lease less than 4% of the 2.5 billion a curse of the federal mineral estate. if we were to allow access to more bad federal mineral estate
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is not logical we could increase our domestic reserve days? >> yes, we would. >> we are used to bigger answers but thank you for the direction. what advantages does the united states have compared to other countries or maybe even hindrances do we have two other countries that we might and congress address that would encourage more domestic development? >> i think the one that we just talked about, which is budget and taxes and there are two things to think about there. one is a direct effect on the producers themselves, the producing community itself. so the tax structures they face, the cost structures they face but then the other one is the health of the overall economy because just like any other industry that companies will do better if the overall u.s.
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economy and budget are in better shape. >> i appreciate that. just one last one of view them. because we heard yesterday a great deal of comparisons between the united states in other countries that i think somewhat were skewed in the response of doing that at how does the domestic oil and gas industry compared here, compared to the industry and other countries in terms of science or technological development? >> it is the norm ashley different. for one thing we have thousands and thousands of producers of all sizes and shapes and specialties anywhere from nine to 10,000, 9000 to 10,000 is the roof estimate of the total number of active producers in the united states large and small. they are motivated to deploy and develop the best technologies that they can and they tried to do that. and they do that freely in an open open market and competitive industry activities.
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and they have access to private owned minerals and not just the public owned minerals. we are the only country that is organized organized outweigh. >> i appreciate that very much. i also appreciate the fact we have talked a lot about offshore development that i come from an inland state that has a great deal of potential development of the were allowed to be there and if somebody is on a schoolteachers retirement my retirement is the future of my retirement is based on ability of economy and my state to fund that as well as my kids education system so i'm very sensitive than remake of arbitrary decisions it takes that potential development off the table when we could be benefiting from that. mr. chairman of five a few minutes left and i yield to the gentleman from louisiana if i have a few seconds left? >> the gentleman has 19 seconds left. >> do you want 19 seth -- seconds jeff? >> i would like to just for the record talk about their rig count real quickly, the rigs that are out there that are
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claiming in the gulf of mexico, those rigs may not be drilling. is that correct? so it doesn't do us any good to to -- drilling. >> correct. rigs could certainly be there not drilling. i can speak to the longer-term issue of how fast it could recover. >> the time of the gentleman has expired and there is a desire for second round so i will certainly recognize the gentleman. the gentleman from utah's time has expired. there is a desire for second round. i have one question of mr. holt and then finish up with mr. landry. dr. foss, there have been records that have been -- between that price differential of the world crude in the west texas and the suggestion is because this has been the rise or the impact of north dakota. and i understand that new production probably would have an impact on the world prices
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but is this difference in price an indication that more domestic production could provide a price base for american consumers in that regard as well as the national security aspect that i have been talking about for some time, dr. foss? >> yes. >> boy that is very definitive. do you want to elaborate? that is the only question i have so i'm not going to ask you another one. explain briefly. >> i understand what you are asking which is the impact of our crude production in our own markets? >> right, exactly. >> course it is a huge impact and i mentioned an idea the suggestion that we need to think about which is the bottlenecking to make sure we can benefit from it, because and we have this problem, we have had this problem before. we have a, natural gas sides periodically and we have new areas that grow and start flourishing.
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we have pipeline bottlenecks and storage bottlenecks and we can't get it out to the markets that we have an accumulation of inventory and one in one part of the country right now and it is contributing to the disparity between our domestic price and internationally traded price of crude, so to the extent that provides an indication to investors that perhaps there is money to be made by building additional oil pipeline and storage terminals and other capacity, they will get there as long as they can get it permitted and enter the market in a way that they feel will work timing wise. >> and all that would be based on the assumption that would be less than the world market prices and therefore benefiting american consumers. is that correct? >> well, they would take advantage of arbitrage to make the investment work.
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so when you have a disparity in a price signal like this, a low price in a producing area relative to higher prices and markets, that allows you to actually finance the structure. that basis differential as we call it that allows people to move forward with projects like new pipeline capacity and other the bottlenecking strategies. benefits consumers. >> which goes back to your original short answer yes it it helps bennett that the american consumer. now i will yield back my time and recognize the gentleman from new jersey, mr. holt. >> i thank the chair and i thank him for his courtesy and allowing further questioning. several of our colleagues raised the point of the cost of gasoline at the pump today. $3.50 am more compared to months ago or a year ago. but i think it has come out
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quite clearly in the testimony today that oil prices are much more a function of what opec does then a function of the rate of issuing oil drilling permits, and gasoline prices are even less correlated with that. gasoline price fluctuations are much more a function of speculation and even what i would call couching. gouging. wishing and hoping and dreaming won't change reality. when we talked about reserves -- that is reality. what resources can be estimated with reasonable certainty to visit -- at exist under reasonable economic conditions. i think we have to face the fact
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that we must have a broader balance of energy portfolio. simplistic solutions won't do. drill baby, drill is simplistic. it does not capture what we have. we do not dominate the production of oil in the world. we never will again dominate the world oil production. the burn rate actually has some meaning. we can quibble about exactly where we are relative to norway and others but what it means is that our leverage in oil prices will be less and less and less and it is already not great. so my question has to do with oil reserves and not cool by the way. in talking about how many barrels equivalent we have of coal, is not really relevant here today.
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in trying to explain that the burn rate doesn't mean anything, dr. foss says well but we are continuing to expand our knowledge of our reserves. my question is, when was the last time that more oil was discovered then was actually produced? in other words, when did this view of reserves around the world stopped keeping up with our use of oil? yes, do you know what you are that was dr. foss? >> we always have more reserves than we have production. reproduce some reserve's. >> let me pretend we are playing jeopardy here. that has been something -- the last year that more oil was discovered than was actually
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produced, what is 1984? more than a quarter of a century ago. we can hope and dream and wish, but we have got to face facts. we can't look for simplistic solutions. we have to have a broader energy portfolio and of course oil is important to louisiana. of course oil is important to texas. of course oil is important to all of their country for all sorts of reasons. but we can't change reality, and we have got to face facts as mr. markey said early on. we have ridden this horse and we have ridden this horse and the legs are giving out. i yield back my time. thank you. >> the gentleman yields back his time. i will recognize mr. landry to close. >> i think we have a few more horses in oil.
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we have got natural gas. i think this horse is a pretty solid horse. we should put her in the gate. we have got a lot of coal. put colin the gate and nuclear certainly does a good job here in this country if we could get back to building refineries and i'm confused to know i know it is hard to say right and there is a lot of confusion on the other side of the aisle, because they talk about opec having a stranglehold and another member comes up and says that exxon has a stranglehold. that is kind of confusing. as to who exact we has the stranglehold. anyway, how long do you think that this trade of speculation has been around in this world? come on, you are all smarter than me. someone knows. do you want to guess?
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100 years? 200 years? century so speculation of commodities has been around for centuries. so it evidently we have been able to grow this country -- this country has been able to grow and prosper all the way through the speculators for centuries and centuries ago. they didn't hang them back then or anything. do you know? if they did or not? was at a punishment for speculation? >> i don't believe so. >> okay, all right. what bothers me is we always want everybody else to increase their production capacity for our gain but we don't want to take responsibility for what we could do ourselves. the interim safety rule issued by the interior department in october 142,010 said that there is sufficient spare capacity in opec to upset the decreases in
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the gulf of mexico's deep water production. do you all believe that is true? i mean if that is the case then prices shouldn't be continuing to go up. wow. [laughter] that may ask you this question. are any of you all familiar with water cuts? any of you familiar with the mideast reserves out there? does anyone want to comment? i'm going to give you off the floor. i've got some time here. >> i'm not sure what the question is. >> if you are familiar with the problems, we always want to turn to the middle east but is it true that the middle east really has a problem with that spare capacity? every time the united states asks the middle east for saudi
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arabia in particular to increase its spare capacity, doesn't that put drescher on saudi's reserves such that it actually damages the research rather than allowing for longevity of these reserves? >> my experiences they manage their reserves pretty efficiently, but i don't have any evidence. >> ms. foss? >> i think and i think many other people would agree including all of our colleagues at eia, that one of the more difficult estimates to put together is that estimate of spare capacity along oil-producing countries and that is one of the things that contribute to great deal to uncertainty in the oil markets themselves. >> what potential does the united states have to create spare capacity here at home
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domestically? >> we have a great deal of capacity to do that because again it is about portfolios. portfolios of opportunities that are available to companies on both public and private lands and to the extent that those portfolios of opportunities are robust. that is our spare capacity. >> will the gentleman yields? on the issue of speculation i don't know the gentleman does grocery shopping and his family are not, but i would guess that your wife from time to time will buy a two for the price of one. would you consider that speculating? >> know, that is more shopping. >> right, but it makes the point. i would guess that your wife is making that purchase because you are speculating the next time she buys that product the price would go up and she speculating on keeping it down.
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when one talks about speculation, if you put it in that terms like that we do that every day in our lives. you buy a jumbo instead of the other because they are speculating that price is different, the differentials so that is why apparently you don't do the shopping. >> she does smart shopping. she buys two for one. >> the time of the gentleman has expired. the gentleman from california is recognized. we get the courtesy to him. certainly if the gentleman wants to have the time he is certainly recognize. >> thank you very much mr. chairman and i do appreciate that. i noticed than a long hearing and that it has been an important hearing and i thank you for putting it together. it has been six years since i've been on this committee and we have obviously had this discussion and debate throughout the six years, and i find it interesting that we all use the same facts more or less but obviously using those facts come to different conclusions.
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and it is interesting we come to different conclusions even though we want in essence the same goals, the same goals that they want, a cleaner more reliable sources -- i say sources of energy for a nation that will be economically viable that will reduce over the years our dependency on foreign sources of energy but the same goals. and it seems with lacking to me me -- what is lacking to me is how we can agree in a bipartisan fashion on how we obtain that goal. and it is not that we are lacking for plans. since 1973, i remember clearly when president nick's and, we experience the first energy gas lines where people had even and odd days to get your gas, and announced a plan then that was
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called energy independence. i'm not so sure that we ever truly are going to be independent but certainly everybody believes we ought to reduce our dependency on foreign sources. at that time we were importing 30% of our energy as foreign sources and since that time every president and numerous congresses have all had energy proposals on plants that in some fashion have been implemented. and of course we have gone from 30% of our energy sources being imported to now almost 60% or more of our energy sources. so you have to set -- step back for a moment and say since we want the same goals, and we have all had a lot of plans out there what has been lacking and i will tell you what i think has been lacking is the ability for any congress or any administration to reach a consensus on a short-term interim and long-term energy policy that in fact will
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fulfill those goals of dealing with the the new technologies reducing our dependency on foreign sources of energy and sticking with a plan. we can't stick with any plan. our plans, you know the planned issuer, the plan for the day. with a plan for this year, two years, three years. we change it and energy prices go up. make certain alternatives are viable and energy prices go down. it makes less energy alternatives viable and we have this kind of circular browbeating up one another that at the end of the day doesn't help the american public nor a long-term energy plan. mr. caruso, what do you think in using all the energy tools in our energy toolbox because i don't think there is a silver bullet out there. i think we have got to use all of them. i have always maintained that for the six years i've been there.
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how do we do a transition and adopt a plan in the near term with more reliant on our fossil fuels and the interim as we transition to longer-term policy and i define longer-term twenty-year send out, to reach the sword of near-term and long-term goals that our country needs to i think the chief and we ought to be focusing on a bipartisan basis. i mean when do we do an inventory of what our current energy needs are? what they are going to be in the midterm and the longer-term, and how to use different energy tools in the energy toolbox you transition? >> i think you are absolutely right about the timeframe. we need to be thinking decades long transition. fossil fuels are going to be with us for a long time to come, and the alternatives for a variety of reasons, technology, economics, scalability are going
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to take a long time to develop but that doesn't mean we shouldn't start as you are alluding to and on that side, the focus should be on technological development and innovation through research and development. and that is the long-term. >> but under short-term part of the conservation is low-hanging fruit. we are 20% trying to get to 30% by the year 2020. >> in the short-term as i mentioned in my opening statement that the vehicle efficiency, improvements in efficiency and homes, the use of code generated electricity. there are a lot of things that can be done to reduce demand so i think we need to do it all and not think it is going to happen overnight. so i think there has been an unrealistic expectation created by all of us including us energy
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experts. >> thank you mr. chairman for the time and allowing this and to sum things up. i look forward to working with you on these important issues. >> i thank the gentleman very much and i want to thank this panel. it has been over three hours that we have convened this and especially i really mean that, especially appreciate the brevity and in fact we have been kicking around some ideas able we are going to call it. it could be as time goes by ward, the once upon a time award or the good time award. whatever it is, i will say that this panel here today on st. patrick's day is the recipient of of the award so thank you during much and the committee will stand adjourned. [inaudible conversations] [captions copyright national cable satellite corp. 2011]
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[captioning performed by national captioning institute] >> yesterday the house voted to eliminate federal funding for n.p.r.. we'll show you that debate in a moment. and on this morning's "washington journal," we'll talk about the federal budget and earthquake detection. live at 7:00 eastern.
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>> federal agencies have been slow to respond to freedom of information act requests according to a new study. today, a discussion of white house transparency. we'll hear from watchdog groups and members of the obama administration. live coverage from the center for american progress starts at noon eastern. president obama will travel to brazil, chile and el salvador leaved friday night. at 2:00 p.m. eastern, secretary of state hillary clinton will preview the trip and talk about u.s. relations with south and central america. that's live from the center for strategic and international studies. >> the house voted to ban federal funds for n.p.r. programming. the vote 228-192 would prevent public radio stations from spending federal funds on programming. the measure, which no house democrats voted in favor of, is
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opposed by the white house and is unlikely to be brought up by the senate. here is a portion of the house debate. >> mr. speaker. i call up h.r. 1076, a bill to prohibit federal funding of national public radio and the use of federal funds to acquire radio content. the speaker pro tempore: th ler. hibthibt -- a bill to prohibit federal funding of nation public radio and the use of federal funds to acquire radio content. the speaker pro tempore: ursuant to house resolution 174, the bill is considered as read. the gentlelady from tennessee, mrs. blackburn, the gentleman from california, mr. waxman, will each control 30 minutes. the chair recognizes the gentlelady from tennessee. mrs. blackburn: thank you, mr. speaker. i yield myself such time as i may consume. and mr. speaker, i ask that all members may have five legislative days to revise and
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extend their remarks on the legislation and to iert extraneous material on the bill. the speaker pro tempore: without objtion, so ordered. the gentlelady from tennessee. mrs. blackburn: thank you, mr. spear. i rise in strong support of h.r. 1076, a bill to get the federal government and federal taxpayers out of the business of buying radio program they do not agree with. this is a bill that is long overdue. regardless of what you think of n.p.r., its programming or statements by its management, the time has come to cut the umbilical chord from the taxpayer support that has become as predictable as an entitlement program. much has changed, mr. speaker, in the media landscape since the corporation for public broadcasting was first created in 1967. followed by its creation of
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national public radio in 1970. today, we have multiple listening choices. there's analogue radio, digital radio, satellite radio, streaming radio over the internet and podcasts, both commercial and the self-published variety. choice and available content is not the problem. if you want to find some content, the only question is where you will find it. in these challenging economic times, committing the xpayer to fund and support particular content, including content he or she may never listen to, highlights this absurd thing of the past. it's time to move forward and let national public radio spread its wings and support itself. this legislation does several important things.
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it prohibits direct federal funding of n.p.r., national public radio, and more importantly it ensures the american taxpayer will not be funding through their tax dollars radio program from n.p.r. or other outlets with which they may not agree. it is also important to recognize that this bill does not do a few things. it does notefund public radio stations. and i want to repeat that, mr. speaker, because i think it's such an important point. it does not defund public radio stations. they still may use federal funding to operate their station or to produce the own programming. public radio stations may also continue to purchase programming from n.p.r. or other sources, just not with federal taxpayer dollars.
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and this bill has no impact. i want to repeat that. this bill has no impact on public television. the added benefit of this legislation is that it ensures that if taxpayer dollars are necessary and given to local stations, it will not be used to purchase generic national programming but instead it can be used to produce local content that actually will meet the needs of the community where these are located. mr. speaker, at this time i want to reserve the balance of my time. . the speaker pro tempore: the gentlelady reserves the balance of her time. the gentleman from california. mr. waxman: i yield myself three minutes. i rise in strong opposition to h.r. 1076. this bill will cripple national
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public radio, public radio stations and programming that is vital to over 27 million americans. we are now voting to deny the public access to one of our nation's most credible source of news coverage. c.b.o. has scored this bill. it does not save a penny. this means that this legislation does not serve any fiscal purpose. but it does serve an ideological one. this legislation is not about reforming n.p.r., it is about punishing n.p.r. we held no hearings on this bill. it didn't get referred to the committee for consideration. it's being handled as if it were an emergency. we don't even know all the facts . but that's apparently no impediment. for decades decisions on federal
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support for public broadcasting have been made two years in advance to insulate public broadcasting from politically motivated interference. this bill removes that buffer. n.p.r. is now exposed to the full force of the political winds that blow through the house of representates. that means the independents and -- independence and objectivity that public broadcasting has tried to uphold is now subject clearly to political interference. for those who complained that they don't want content to be one way or the other on the political spectrum, but to be honest and fair, the right wing republicans are trying to impose in their view of what n.p.r. should be sang in the content of their programming. they'll say that's not the case. but, mr. speaker, that is the
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case. there is no reason for this bill. it is vindictive. it is mean-spirited. it will hit the smallest stations in rure areas hard. public radio is indispensable for access to news that's hard to get, especiay with broadband service is limited. i urge my colleagues to vote against this bill and i reserve the balance of my time. i ask unanimous consent that the gentlelady from the state of california, ms. eshoo, the ranking member of the subcommittee on telecommunication, control the rest of our time. the speaker pro tempore: without objection, so ordered. the gentleman reserves the balance of his time. the gentlelady from tennessee. mrs. blackburn: thank you, mr. speaker. at this time i would like to recognize the author of the legislation, mr. lamborn, he is recognized for five minutes. the speaker pro tempore: the gentleman is recognized for five minutes. mr. lamborn: thank you, mr. speaker. thank you, madam blackburn, for your great work you do on the committee. i introduced h.r. 1076 because
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the federal government can no longer afford to fund programs that are fully capable of standing on their own. this is not about the ideology of n.p.r. executives or the content that n.p.r. produces. but whether in this age of trillionollar annual deficits taxpayers should subsidize a nonessential entity. plain and simple, this bill accomplishes three things. first, it prohibits public radio stations from using federal funds to purchase programming. current federal law requires that about 26% of federal grants to public radio stations be used for the production or acquisition of programming. many stations use these restried grants to purchase programming from n.p.r. these programming fees are the largest single source of n.p.r. revenue at $56 million in fiscal year 2010. second, h.r. 1076 prohibits station from using federal funds to pay n.p.r. dues. over 00 member stations paid a
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total of $2.8 million in dues to n.r. third, my bill prohibits direct federal funding of national public radio. for fiscal year 2010, n.p.r. received over $5 million in direct funding from the corporation for public broadcasting, departments of education and commerce, and the national endowment for the arts. these three sources of revenues i just described totaled about $64 million in fiscal year 2010. local public radio stations would not be able to use federal tax dollars under this bill to purchase content whether it's from n.p.r. or any other vendor. however under this bill a station could use other dollars for the payment of n.p.r. dues or the acquisition of programming. should this bill become law, the prohibition of funds would take effect immediately. but the real issue today is the proper role of the federal government with natial public radio and whether government programs and services that can be funded privately should receive taxpayer dollars.
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we live in an age of digital radio, computerized digital streaming, commercial all news radio, and radio talk shows, many of which are also streamed on the internet or over satellite radio. these provide sources of news and opinion without federal taxpayer dollars. n.p.r. should do the same. with the national debt over $13 trillion, the government should simply not continue to fund nonessential services. and this bill is just one step. long before any firings, videos, and executive comments at n.p.r., i sponsored legislation in congress to pull the plug on taxpayer funding for the corporation for public broadcasting, n.p.r.'s parent company, as well as n.p.r. last year many of you will remember this issue came up as a youcut item and we voted in suppt of defundg. last month this house passed h.r. 1, within that bill the corporation for public broadcasting's unobligated funds
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for fiscal year 2011 would be rescinded. when you cupple h.r. 1 with this bill, h.r. 1076, we end taxpayers having to subsidize national public radio. i'm a strong believer in the free market. i would like to see n.p.r. rework its business model and compete for all its income. n.p.r. already receives a huge amount of funding from private individuals and organizations through donations and sponsorships. n.p.r. can and ould be entirely supported with private sources. in my own state of colorado, colorado public radio received in fiscal year 2010 only 6% of its funding from the corporation for public broadcasting. now, according to this bill colorado public radio is still permitted to apply for and receive federal grants through the corporation for publ broadcasting, but they cannot use federal money for the n.p.r. dues or purchasing of content.
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they could use the other 94% of their money to purchase program content. willhis potentially require them to review and reprioritize where money is spent? i'm sure it will. but will it kill its progmming? no way. according to n.p.r., federal funding to supplement operations amounts to less than 2% of its annual budget. some have said this congress should not bother with such a small amount of money. only in washington could anyone say $64 million is not worth saving. you have to start somewhere if you're truly serious about getting our fiscal house in order. if congress cannot make difficult decisions in the small areas, how can we even begin to tackle entitlements or other major programs? if we look at the vide that has received so much attention, ron shuler amids n.p.r. would be better off without federal funding. there is no need for further debate. n.p.r. does not need taxpayer
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dollars. we can save a program or we can save our country. americans want washington to get serious about ending our overspending. if we can do that, the economy will get better and we'll have lessnemployment and more jobs. mrs. blackburn: i yield an additional 30 seconds. the speaker pro tempore: the gentleman is recognized. mr. lamborn: to wrap up, like many americans i enjoy much of n.p.r.'s programming, but let it live on its own. it can do that simply by changing its business model. just take the taxpayer out of the equation. thank you, mr. speaker. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentlelady from tennessee reserves the balance of her time. the gentlelady from california. ms. eshoo: thank you, mr. speaker. i rise today in fierce opposition to this bill which is going to adversely affect more than 34 million national public radio listeners through 900
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local stations across ou entire country. my republican colleagues have declared an emergency to rush this bill to the floor without any hearings whatsoever to examine the proposal. i think that's a bad way to do business. we have many emergencies to deal with in our country, but attacking and crippling n.r. is hardly an emergency. what the bill does, and it does it in a very sneaky backdoor way, what the bill does is it cuts off the use of all federal funding to n.p.r. by preventing any grants to it. it prevents any support to n.p.r. by the corporation for publ broadcasting. and it prevents support to n.p.r. programming from public radio stations across the country. in other words, it cripples it, it hobbles it. which is really wt the majori is seeking to do.
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this proposal is not going to do anything about reducing the defici the c.b.o. has weighed in. it doesn't cut any federal spending. in fact, the bill doesn't produce one penny in savings. what's very clear is what it does do. and it's really purposeful. and that is to hobble n.p.r., threatening 9,000 jobs at stations across the country. why? i think the motivations behind this effort are quite clear. they are rooted in an ideological view about what n.p.r. broadcasts. and it capitalizes on recent headlines involving ron shuler and ron williams. this attack on n.p.r. strikes at the core of a wide array of n.p.r. programming. that americans enjoy every single day all week long across
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the country. from the morning edition and to two of my favorite "car talk" and "the world of agra." i acknowledge that our nation faces threats, but "car talk" is hardly one ever them. and neither is diane reas. silencing what some disagree with, make no mistake about it, is a threat to our democracy. a great democracy does not silence voices. we want many voices to the many. n.p.r. programming reaches more than 900 independently owned and operated stations across the country. from san francisco kqed, the most listened to public radio station in the country, with who are than 740,000 listeners iche week, to small rural stations -- listeners each week, to small rural stations, like the chairman of the subcommittee, in pendleton, oregon.
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these stations provide an important public service to the local community and people trust it and they enjoy it. they want it. they like it. this is national programming with local listenership. and n.p.r.'s listenership h increased unlike other stations by 72% over the last 10 years. in a recently national survey found, that's why i think this is an ill begotten proposal by the majority, you say you listen to the american people, i think you have to take the plugs out of your ears, a recent survey found almost 70% of all voters across the entire political spectrum oppose terminating the funding for public broadcasting, including 56% of republicans in the country. so i think it's time to stand up for n.p.r. i think that this is a phony emergency measure and i don't
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think n.p.r. deserves to be treated this way. i urge my colleagues to vote to preserve really what i think is a national treasure. that it prides in very tough times very clear and important news and information to instruct our country and listeners in local communities around our nation. and with that i reserve the balance of my time. the speaker pro tempore: the gentlelady reserves the balance of her time. the gentlelady from tennessee. mrs. black blurn: -- mrs. blackburn: thank you, i yield one minute to the majority leader, the gentleman from virginia, mr. cantor. the speaker pro tempore: the gentleman is recognized for one minute. mr. cantor: i thank the speaker. i thank the gentlelady. mr. speaker, let as -- let's be honest and talk about what this bill is about. this bill is about making sure that we are spending taxpayer dollars the way that the people
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that earn them would spend it. and we saw as the gentlelady from california indicated, on video, executives at n.p.r. saying, that they don't need taxpayer dollars. so that's number one. that's out there. that was demonstrated for all of america to see. we are also in the process of making sure that washington begins to do what every american family and small businessperson is having to do right now. it's called tightening the belt. it's called trying to learn how to dmore with less. . and inherently what that mes is we got to start prioritizing e things that are important to the american people. the problem is we've seen n.p.r. and its programming often veer far from what most often veer far from what most americans would like to see as